Oil at $100: How the Iran Conflict and Strait of Hormuz Closure Are Reshaping Global Energy Markets

The global oil market is experiencing its most severe supply disruption in history. Since the outbreak of hostilities between the United States, Israel, and Iran in late February 2026, the Strait of Hormuz — the world’s most critical oil transit chokepoint — has been effectively closed to commercial shipping, cutting off nearly 20 million barrels per day of crude and product exports.

Brent crude has surged past $100 per barrel, touching $109 at its peak before settling around $98. The International Energy Agency described the situation as “the largest oil supply disruption in history,” with global output expected to fall by 1.5 million barrels per day in 2026 compared to last year.

Supply Losses of Unprecedented Scale

According to the IEA’s April Oil Market Report, the loss in oil exports exceeds 13 million barrels per day, with cumulative supply losses reaching 360 million barrels in March alone and 440 million projected for April. Production has been shut in across Iraq, Kuwait, the UAE, and Saudi Arabia as tanker traffic through the Strait came to a near standstill.

The impact extends well beyond crude oil. Gulf producers that exported 3.3 million barrels per day of refined products and 1.5 million barrels per day of LPG in 2025 have seen those flows virtually halted. More than 3 million barrels per day of regional refining capacity has already shut down due to attacks and lack of viable export outlets.

Global Demand Destruction

Higher prices are now destroying demand. The IEA estimates global oil demand contracted by 800,000 barrels per day year-on-year in March and by 2.3 million barrels per day in April — the deepest contraction since COVID-19. Asian petrochemical producers have curtailed operating rates, and widespread flight cancellations across the Middle East, parts of Asia, and Europe have crushed jet fuel consumption.

IEA member countries agreed in March to release 400 million barrels from emergency reserves to address disruptions, but this has only partially offset the supply gap.

Price Outlook and Scenarios

The World Bank’s April 2026 Commodity Markets Outlook projects Brent averaging $86 per barrel for the year, an upward revision of $26 since January. However, the Bank warns that if disruptions prove protracted, oil could average $95 to $115 per barrel. The EIA similarly expects Brent to average around $91 in Q2 before falling to $70 by Q4 if Hormuz flows resume.

A prolonged conflict scenario would keep prices elevated through the end of the year, maintaining inflationary pressure on the global economy and complicating central bank policy decisions worldwide.