The war that did not blow up the market: how the world defused the 2026 oil shock

When the United States and Israel launched massive strikes on Iran on 28 February 2026, the oil market reacted almost immediately. A few days later, the Islamic Revolutionary Guard Corps declared the Strait of Hormuz closed, and tanker traffic through it collapsed first by tens of percent and then to almost zero. The International Energy Agency called this the largest supply disruption in the history of the global oil market: millions of barrels per day were suddenly taken off the market.

Brent, which had been trading at around $72 per barrel on the eve of the war, crossed $100 in March and reached an intraday peak of about $126 at the end of April. It seemed that the bleakest scenarios were coming true: the world’s main oil "chokepoint" had been closed, ship insurance was becoming more expensive, physical flows had stopped, and inventories were being depleted rapidly.

But by mid-June, Brent had fallen back below $80, and after the first signs of normalization in passage through the Strait of Hormuz, it dropped even further. The strongest energy shock in recent years did not disappear, but it faded faster than many observers had expected. Understanding why this happened is more important than simply recording the price: it holds a lesson for everyone who makes forecasts about external shocks.

The first thing the 2026 crisis showed was that the blow was not “to the market as a whole,” but to a single geographic point. The Strait of Hormuz is a narrow chokepoint through which, before the war, roughly a quarter of global seaborne oil trade and about a fifth of global LNG trade, primarily Qatari, passed. Iran effectively closed the strait not through a full military blockade, but through threats of strikes, mining, attacks on ships, and control over transit routes.

The decisive mechanism was not even military, but insurance-related. As soon as war-risk insurers withdrew from the region, and transit premiums rose from fractions of a percent to several percent of a vessel’s value, commercial traffic began to grind to a halt. The market stalled not because every ship physically could not pass, but because passage became too expensive, too risky, and legally uncertain.

The crisis halted not only the military risk, but also the cost of risk. This is the central nerve of modern energy shocks: physical infrastructure may remain intact, but the market still slows if insurance, security, and liability become prohibitive.

If the shock was so strong, why didn’t the price stay at $120 for long? Because the global system had two types of shock absorbers — market and political. They did not work perfectly, but they worked in tandem.

1. Strategic reserves. By March 11, the member countries of the International Energy Agency had agreed on the largest release of oil from reserves in the agency’s history. This did not fully replace the Strait of Hormuz, but it changed market expectations. It became clear that governments would not stand by passively in the face of the shock.
2. Supplies outside the Gulf. Producers and traders outside the conflict zone began to reroute flows. Increased supplies from the Atlantic basin, the United States, and other directions could not quickly replace the Gulf’s entire volume, but they reduced the shortfall in key markets.
3. Bypass pipelines. Saudi Arabia and the UAE used routes that bypassed the strait. Their capacity is limited, but even a partial bypass of the Strait of Hormuz proved critically important. The market saw that a blockade does not mean a complete halt to all Middle Eastern exports.
4. Demand decline. The high price began to cure itself. Some consumers cut purchases, some economies shifted to fuel conservation, and demand in Asia and Europe proved weaker than earlier expectations. By June, it was already clear that global oil demand had fallen more sharply than had been assumed at the start of the crisis.
5. Political release valve. At the height of the crisis, temporary political exemptions and arrangements began to emerge that would have been impossible in normal times. Some supplies that had previously been constrained by sanctions and insurance regimes began to factor back into traders’ calculations.
6. Ceasefire and expectations of normalization. The price was ultimately driven down not only by physical supplies but also by expectations that transit would be restored. As soon as the market believed that the Strait of Hormuz could gradually reopen, prices began to fall faster than actual volumes could return to normal.

Although the shock was amplified by the fact that a significant share of OPEC spare capacity was on the same side of the strait, and Europe entered the crisis with tight gas and fuel inventories, the dampening factors as a whole proved stronger than the linear scenario of “Hormuz is closed — oil heads to $200.”

The most interesting thing about this story is not only the price dynamics, but also the competition of forecasts. The 2026 war became a rare natural experiment, because it made it possible to compare different forecasting methods with what actually happened in the market.

It was not only the alarmists who were wrong. Those who clung too long to pre-crisis inertia were wrong as well. In early March, some banks were still pricing in 2026 at around $70–75 per barrel. Goldman Sachs raised its Brent forecast for the second quarter only to $76, while UBS expected average annual Brent at around $72. For a normal market, these would have been cautious estimates. For a market where the main oil chokepoint is effectively closed, they turned out to be too low.

Then the second stage began — forecasts of a price spike. JPMorgan spoke of a likely range of $120–130 in the near term and a risk of above $150 if disruptions to supplies through the Strait of Hormuz persisted until mid-May. This forecast proved partly accurate. The peak of around $126 did indeed confirm that a short-term jump to $120–130 was realistic. But the move to $150 and above did not materialize.

The third group consisted of stress scenarios of a prolonged blockade. Public estimates of $150–200 per barrel and above were circulating. These cannot simply be dismissed as alarmism. They were useful as a test of the resilience of the global system to the worst-case scenario. But as a forecast of the actual trajectory, they overestimated the linearity of the shock. These scenarios assumed that the closure of the strait would almost automatically turn into an uncontrollable price surge. Reality turned out to be more complex. Reserves, alternative routes, demand destruction, policy decisions, and expectations of a partial restoration of shipping all came into play.

The fourth group was agencies and balance models. The World Bank, EIA and IEA described the physical scale of the shock and the supply-demand balance better than many others. Their strength lay not in precisely predicting the day prices reversed course, but in the fact that they took into account not only geopolitics, but also inventories, demand, production, routes and the pace of flow recovery. That is why their estimates were closer to the working range than early bank forecasts or extreme stress scenarios.

But the market itself came closest to capturing the shape of the crisis. In March-April, the futures curve moved into a sharp backwardation: near-dated contracts were much more expensive than longer-dated ones. In market terms, this meant that conditions were bad now, but should improve later. Longer-dated contracts did not believe in a prolonged $150–200. They were signaling not the end of the oil market, but an acute, albeit finite, physical shortage.

The market did not know the date of the ceasefire. But it read the structure of the shock better than many individual forecasts: the shortage was severe, but not endless; prices were high, but they were destroying demand; the physical risk was great, but politics and reserves would seek a way out.

The war showed that, when assessing an oil shock, one cannot rely on a single price and a single scenario. A set of several questions is needed.

• How much supply was actually lost?
• How quickly can shipping and insurance be restored?
• Are there bypass routes, and how much capacity do they actually provide?
• How much oil can be released from reserves?
• Where does demand destruction begin?
• What political decisions become possible under the pressure of a crisis?

The $150–200 scenarios were important as a stress test. But managerial planning cannot be based solely on the upper end of panic. No less dangerous is the opposite mistake — clinging to pre-crisis $60–70 when the physical infrastructure has already come to a halt.

The most robust approach is not a single point price, but a range and the conditions for shifting between scenarios. For 2026, the base working range after the initial shock looks closer to $75–90 per barrel, with a possible decline if the Strait of Hormuz stays open and a rebound to $100–120 if the ceasefire breaks down or there are new strikes on infrastructure.

The main takeaway from the crisis is this: the market blunted not the war itself, but the linearity of its price trajectory. The closure of the Strait of Hormuz proved to be a powerful shock, but not an automatic end to the global oil system. Resilience emerged where there were reserves, bypass routes, policy decisions, and demand capable of contracting quickly.

For governments, companies, and think tanks, what happened carries a practical lesson. An external shock cannot be read solely through the headline and the loudest price. It is important to distinguish between:

• physical supply shortage and insurance cover shortage;
• the price peak and the annual average price;
• stress scenario and baseline trajectory;
• the global Brent price and a country’s local ability to sell its resource;
• market forecast and a political decision that can change the market within a matter of days.

The 2026 war did not prove that oil shocks are no longer dangerous. On the contrary, it showed how quickly one narrow chokepoint can shake the entire global system. But it also showed something else. Even the most severe shock must be assessed not only by the force of the first blow, but by which buffers kick in afterward.

The materials reflect interim findings as of June 17, 2026. The war is not over; the research continues.

This article is part of TALAP’s series on the 2026 oil shock and its consequences.

1. Part 2
2. Part 3
3. Part 4