Recent volatile military developments involving the United States, Israel, and Iran have triggered significant fluctuations in international oil prices, impacting the global economy in multiple ways. The duration of the conflict, navigation conditions in the Strait of Hormuz, and the extent of damage to energy infrastructure in Gulf countries are among the key variables influencing oil price trends. Analysts widely agree that even if hostilities cease, oil prices are likely to remain elevated and volatile for a considerable period, with a rapid return to pre-conflict levels unlikely.
Oil prices are currently being driven more by news flow than by supply-demand fundamentals. In early April, prices retreated from recent highs amid reports of temporary cease-fires and potential negotiations between the U.S. and Iran, stabilizing between $90 and $100 per barrel. Short-term price movements remain highly sensitive to negotiation progress and conflict developments. For instance, U.S. hints on April 14 about possible resumed talks triggered a sharp sell-off, with some crude futures contracts in New York falling nearly 8% in a single day.
Experts suggest that the longer shipping through the Strait of Hormuz remains disrupted, the more prolonged high oil prices will be. Supply diversification and alternative transport routes are seen as insufficient to calm market panic. Goldman Sachs recently projected that if the strait remains blocked for another month, the average Brent crude price could exceed $100 per barrel by 2026. A prolonged disruption coupled with reduced Gulf crude supplies could push third-quarter averages to $120 per barrel.
The global oil supply crisis is transitioning from a warning phase to one of tangible impact. With the final pre-blockade tankers expected to deliver their cargoes around April 20, inventories built before the shipping restrictions will be depleted, leading to what analysts describe as a full-blown supply shock. The spot price of Brent crude, which serves as a benchmark for about two-thirds of global physical oil trade, spiked to $144 per barrel in early April, creating a more than $30 divergence from futures prices and signaling extreme tightness in physical supplies.
According to Macquarie Group, approximately 13% of global oil production was offline by the end of March, equivalent to about 16 million barrels per day unable to reach markets. Unlike previous supply disruptions caused by sanctions, the current situation involves both blocked trade routes and direct damage to exporting countries' production capabilities. The International Energy Agency reported that early April shipments through the Strait of Hormuz remained severely constrained, with daily loadings of crude oil, liquefied natural gas, and refined products at 3.8 million barrels—far below the February average exceeding 20 million barrels per day. This price surge has been faster and steeper than during the 2011 Libya conflict or the 2022 Ukraine crisis escalation, constituting a sudden supply shock that may prove difficult to resolve quickly.
Analysts express concern that even after hostilities end, rebalancing supply and demand will be challenging. Many oil-producing countries have suspended production, temporarily shut wells, or suffered infrastructure damage, complicating recovery efforts. Some reports indicate that restoring pre-war production levels could take three to four months due to attacks on energy facilities and saturated storage capacity, implying that markets will maintain a high-risk premium for an extended period.
A return to normalcy in energy markets would require multiple steps even after the Strait of Hormuz reopens: producers must first restore output to pre-conflict levels; tankers must then transport that output to refineries; finally, refineries must process it into usable fuels. Each phase requires significant time. The U.S. Energy Information Administration projects that if the conflict concludes this month and the strait gradually reopens, crude prices will remain high through 2027, with some refined products like fuel oil not returning to pre-conflict levels until 2028.
Observers note that geopolitical conflicts have structurally raised oil price floors while highlighting energy supply vulnerabilities, prompting economies to recognize the growing importance of energy transition. In the long term, the global energy landscape is expected to shift toward diversification and decarbonization. As the traditional dominance of oil weakens and renewable energy gains prominence, international oil prices may trend downward.