Oil markets spent the second quarter of 2026 caught between geopolitical turmoil and shifting supply expectations, with prices fluctuating wildly as investors weighed the impact of conflict in the Middle East against the prospect of increased production from major producers.
At the onset of Q2 2026 both oil benchmarks sat above US$100 per barrel (bbl) with Brent at US$101.11/bbl, just off its Q1 high of US$111.94/bbl (March 20); while West Texas intermediate (WTI) started the three month period at its Q1 high of US$102.91/bbl (March 30).
Continued tensions surrounding Iran and the blockade of Strait of Hormuz upended global energy flows, reviving concerns about supply security and inflation, pushing prices for oil higher.
WTI hit a 46 month peak on April 7, reaching US$112.84/bbl. This 2026 high marked a significant 97.8 percent surge from its opening price of US$57.04/bbl in January.
The Brent benchmark, which has greater global exposure, climbed to a high of US$114.47/bbl. This peak not only marked a 46-month high but also represented a massive 90 percent increase compared to its price of US$60.24/bbl per barrel in January 2026.
By mid-May on and off again peace and ceasefire negotiations renewed hopes for the reopening of the strategic shipping corridor quelling continued price growth, as both Brent and WTI slipped below US$100/bbl.
Meanwhile, OPEC+ policy shifts, the United Arab Emirates’ departure from the producers’ group and ongoing uncertainty surrounding global demand added further volatility to an already turbulent market.
Promises of a peace truce and a signed memorandum of understanding between the US and Iran in mid-June pushed prices to US$79.57/bbl (Brent) and US$76.74/bbl, on June 17, levels last seen in March.
As Q2 came to a close, investors were left assessing whether the quarter’s price spike represented a temporary geopolitical premium or the beginning of a longer-term shift in energy markets.
Hormuz closure triggers supply chain shockwaves
Few things in Q2 were as impactful as the blockade of the Strait of Hormuz, a crucial waterway that sees one fifth of global oil pass through. After the February 28 closure the ripple effect reverberated across global supply chains still fragile from COVID-19 disruptions.
The ongoing conflict in Iran created a critical bottleneck in the Strait of Hormuz, a chokepoint that naval experts warn is essential to global prosperity.
During a podcast interview with the Investing News Network (INN), retired US Navy Commander Phil Ehr, explained that the disruption has multiple cascading effects beyond the obvious spike in oil prices.
Listen to the full interview to hear Ehr’s thoughts on the energy security risk and copper’s role in the energy transition.
“It’s raising the cost of everything in the supply chain,” Ehr said, pointing to mining, refining and delivery of copper-bearing materials to market.
Beyond energy, the strait’s closure has severely restricted the availability of sulfuric acid, a key input in copper mining. Much of that acid originates in the northern Arabian Gulf and must transit south to smelters in Africa, Chile and China. Without free passage, Ehr said, “that war has been a big problem.”
The war could redraw LNG trade routes
Adding to the challenges of the blocked shipping lane, attacks on Qatari LNG infrastructure also raised concerns and shocked supply.
By mid-April the sector was considering alternate routes and sources of LNG supply. European buyers, including Germany’s Uniper, are in talks with Ksi Lisims LNG in British Columbia.
Shell (NYSE:SHEL) and TotalEnergies (NYSE:TTE) have already signed 20-year offtake agreements with the proposed terminal. A source said the war has driven “especially strong interest” from buyers worldwide, including Europe.
Canada’s LNG sector has historically focused on Asia, and shipping to Europe requires navigating the Panama Canal. But the conflict has shifted buyers’ risk calculus toward stable jurisdictions.
TC Energy CEO François Poirier called the disruption “a generational opportunity” for Canada, warning the country must move faster to compete with the US, which has opened eight LNG terminals since 2016.
Although LNG price fluctuations remained more muted over the 90 day period, concern that a shortage would materialize ahead of the key winter demand season supported some price movements.
Starting the year at US$3.63 per million British thermal units (MMBtu) prices spiked in late January to a year-to-date high of US$5.04 MMBtu. Prices fell to US$3.50 MMBtu at the start of February and have remained below that level since.
Recent Wood Mackenzie research explores three potential paths for international LNG markets in the wake of the Strait of Hormuz blockade. The ongoing regional hostilities have effectively sidelined over 80 million tons per annum (Mtpa) of capacity.
Wood Mackenzie analysts warn that an extended shipping lane disruption will continue to drive up costs for oil, natural gas, and electricity, intensifying the economic burden on consumers and industrial sectors across the globe.
“The Strait of Hormuz closure has done more than remove LNG from the market. It has removed certainty,” wrote Kateryna Filippenko, research director, global gas markets, at Wood Mackenzie.
“There is no longer consensus on how the market evolves.”
Filippenko continued, “Volatility is the new baseline. The question for buyers, investors, and policymakers is not which scenario proves correct. It is whether their portfolios and supply strategies are resilient enough to absorb any of them.”
Europe’s new gas supply corridors take shape
Europe’s effort to reduce its reliance on Russian natural gas continued to gain momentum in Q2, with analysts increasingly focused on how new supply corridors could reshape energy flows across Central and Eastern Europe over the coming years.
A June 10, ICIS analysis received by INN suggests the region’s gas balance could improve significantly by 2028, even after the expected phaseout of remaining Russian pipeline imports. The shift is expected to be driven by two emerging supply hubs: Poland in the north and Romania in the south.
Romania’s offshore Neptun Deep project is central to that outlook.
Expected to begin production in 2027, the Black Sea development could add roughly 8 billion cubic meters of annual gas supply, positioning Romania as the European Union’s largest gas producer.
“The Romanian government’s stance on pre-emption rights will be pivotal for regional gas markets,” ICIS analysts wrote, noting that decisions regarding domestic allocation versus exports could determine whether regional buyers gain access to Romanian gas or are forced to rely on more expensive alternatives.
Meanwhile, Poland is strengthening its role as a northern gas gateway through expanded LNG import capacity and cross-border infrastructure upgrades.
Still, ICIS cautions that infrastructure alone will not guarantee greater regional supply, arguing that market fundamentals and available volumes remain more important drivers of future gas flows than transportation tariffs or pipeline capacity.
Global growth trimmed as oil shock bites
In the June Global Economic Outlook, Fitch Ratings noted in response to the US-Iran war the international credit agency was cutting global growth forecasts for 2026 by 0.2 percentage points to 2.4 percent.
The downgrades are widespread as rising inflation squeezes real wages, dampens consumption and raises input costs across industries.
But the damage is being cushioned by stronger-than-expected AI-related investment, which is supporting world trade and Asian exports. Fitch Ratings raised its China forecast by 0.3 points to 4.6 percent and its Korea outlook following surprisingly strong first-quarter data and the tech boom’s export uplift.
US growth was cut 0.3 points to 1.9 percent since March, while the eurozone fell 0.4 points to 0.9 percent. Emerging markets excluding China slipped 0.2 points to 3.2 percent.
“We assume (the Strait of Hormuz) will not start to reopen until July. We have revised our 2026 average price assumption for Brent crude to US$87/bbl,” the report states.
“The oil shock is a strong headwind to world growth, but our base case is far less severe than the pernicious oil shocks of the 1970s.
According to the firm, crude values peaked at US$170/bbl per barrel in 1979. In the decades since, OPEC+ has transformed its market influence and global petroleum usage has changed. The proportion of global GDP attributed to oil consumption has been reduced by 50 percent since 1980.
“Nevertheless, with geopolitical uncertainties remaining high, we have also examined an adverse scenario where oil prices average US$100/bbl in 2026, equity prices fall by 10 percent and credit conditions tighten,” the report cautioned.
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Securities Disclosure: I, Georgia Williams, hold no direct investment interest in any company mentioned in this article.
Editorial Disclosure: The Investing News Network does not guarantee the accuracy or thoroughness of the information reported in the interviews it conducts. The opinions expressed in these interviews do not reflect the opinions of the Investing News Network and do not constitute investment advice. All readers are encouraged to perform their own due diligence.