Oil Market Report: Q1 2026

The global oil market was impacted hard by the Israel/US attack on Iran on 28 February and the subsequent closing of the Strait of Hormuz by Iran on 2 March. These events posed risks comparable to the four worst oil shocks in history, which drove Brent crude oil prices to record historical peaks.

The Israel/US-Iran war caused crude oil prices to surge by 50% after military operations began. This price spike was triggered by severe disruptions to shipping through the Strait of Hormuz, a critical chokepoint that accounts for around 20% of global seaborne oil trade.

The immediate and follow-on effects on global oil markets included:

• Price spikes: In the days following the initial joint strikes on Iran, the international benchmark Brent price jumped 8% to $77/bbl. Prices continued to climb, regularly holding above $100/bbl throughout the first quarter.
• Supply deficits: Shipping companies halted passage through the Strait of Hormuz. The physical deficit climbed to 10 million barrels per day. Countries relying heavily on the region for exports experienced sharp volume declines.
• Utilisation of strategic reserves: To counter the supply shortages, countries relied on alternative pipelines in Saudi Arabia and the UAE, while others tapped strategic reserves. However, sustained disruptions resulted in a significant drawdown of these stockpiles, particularly for the US and by an unknown amount for China, the two countries with the largest strategic reserves.
• Macroeconomic impacts: The surge in energy prices drove global inflation higher and contributed to the International Monetary Fund and OECD downgrading global economic growth forecasts. The higher prices also sparked intense debates over the extent of demand destruction.
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Contacts
Robin Matthews
Regional Director, Middle East & Africa – Energy & Natural Resources
robinmatthews@tenetcons.com

Maxim Filippov
Partner, M&A
mfilippov@tenetcons.com