The Iran conflict has triggered the largest oil supply shock in history, sending Brent crude to $138/bbl. Here's what the EIA, Goldman Sachs, and major analysts predict — and what it means for your inThe Iran conflict has triggered the largest oil supply shock in history, sending Brent crude to $138/bbl. Here's what the EIA, Goldman Sachs, and major analysts predict — and what it means for your in
The Iran conflict has triggered the largest oil supply shock in history, sending Brent crude to $138/bbl. Here's what the EIA, Goldman Sachs, and major analysts predict — and what it means for your investments.
Overview
When U.S. and Israeli forces launched strikes against Iran on February 28, 2026, the global energy market entered its most severe supply disruption since the 1973 Arab oil embargo. The Strait of Hormuz — through which roughly 20% of the world's crude oil and LNG normally flows — effectively ground to a halt. Brent crude surged from under $80 a barrel to a peak of $138, before retreating as diplomatic signals emerged. As of May 26, 2026, prices remain elevated in the $97–$105 range, with every diplomatic headline still capable of moving markets by double digits in a single session.
The shockwaves have reached far beyond the oil patch. U.S. gas prices crossed $4 a gallon. Asian refining margins hit record highs. Global inflation ticked up to its highest level in nearly two years. For investors across asset classes — from energy equities to crypto — understanding what drives oil prices now is no longer optional.
Key Takeaways
The de facto Hormuz closure removed an estimated 14 million barrels per day from global supply — more than three times the scale of the 1973 oil embargo
Brent crude peaked at $138/bbl in early April; current price (May 26, 2026) sits near $103–$105/bbl
The EIA's May 2026 forecast projects Brent averaging around $106/bbl in May–June, falling to $89/bbl in Q4 as Hormuz gradually reopens
Goldman Sachs cut its Q2 Brent forecast to $90/bbl after ceasefire signals, with Q3 at $82 and Q4 at $80 under its base case
ADNOC's CEO has stated that full Hormuz throughput cannot realistically resume before Q1 or Q2 2027, even if the conflict ends immediately
Diplomatic resolution and supply normalization operate on fundamentally different timelines — a deal does not equal lower prices overnight
1. Why This Crisis Is Different
The Middle East has seen conflict before. What distinguishes 2026 is the scale of physical supply removed from global markets.
According to the IEA's April 2026 Oil Market Report, global oil supply plummeted by 10.1 million barrels per day in March alone — the largest single-month drop in the history of the modern oil market. At its height, the effective Hormuz shutdown locked out approximately 14 million barrels per day of Middle Eastern output, encompassing Saudi Arabia, Iraq, the UAE, and Kuwait's primary export routes. There is no overland alternative capable of absorbing volumes at this scale.
To calibrate this against history: the 1973 Arab oil embargo removed roughly 4–5 million barrels per day from Western markets and triggered a fourfold price spike and recessions across multiple economies. The 2026 disruption is more than three times larger in raw volume terms, occurring in an era when global economies remain deeply oil-dependent.
2. Price Timeline: From Shock to Partial Recovery
Early March 2026 — Ignition: Within 24 hours of the initial strikes, WTI futures surged 24.6% to $113.30 a barrel, with Brent reaching $114.38. As Fortune reported, Dow futures simultaneously crashed over 1,000 points as Wall Street began pricing in a prolonged conflict.
April 2026 — Peak Pressure: Physical crude prices surged to record levels near $150/bbl on the spot market, with Brent futures hitting $138/bbl on April 7, according to the IEA. Middle distillate prices in Singapore briefly exceeded $290/bbl, setting all-time highs. The IEA noted that the physical-futures price disconnect became "increasingly acute" as oil-importing nations scrambled to source replacement barrels.
Late April — Ceasefire Relief: A two-week ceasefire announcement provided temporary relief, with WTI dropping roughly 15% to around $95/bbl. Goldman Sachs trimmed its Q2 forecast from $99 to $90, citing "a reduction in the risk premium at the front of the curve and already edging up oil flows through the Strait of Hormuz."
May 26, 2026 — Current: Brent fell below $100/bbl for the first time in a month on Monday, briefly touching $97.90, as The Washington Times reported that Secretary of State Rubio called the U.S. proposal a "pretty solid thing on the table." Prices have since stabilized near $103–$105/bbl as markets weigh the gap between diplomatic language and tangible supply recovery.
3. The Single Most Important Distinction Markets Keep Getting Wrong
When headlines announce progress in peace talks, oil prices fall. When talks stall, prices surge. This reflexive behavior contains a dangerous analytical error: conflating diplomatic resolution with supply normalization.
These are, as analysts at ICIS have argued, two entirely separate events operating on entirely different timelines.
The head of ADNOC — Abu Dhabi National Oil Company — has publicly stated that full oil flows through the Strait of Hormuz cannot realistically resume before Q1 or Q2 2027, even under a scenario where the conflict ends immediately. The reasons are rooted in physics and infrastructure: upstream wellheads require safety inspections before restart; port and terminal facilities need damage assessments; tanker underwriters must reprice voyages through the region; and supply chain relationships between sellers and buyers must be rebuilt.
ICIS analyst Kojo Orgle further notes that even if the Strait physically reopens quickly, physical oil market tightness is projected to persist for at least three months or more beyond any resolution. A ceasefire announcement is not a signal that supply conditions have normalized. Investors who treat diplomatic headlines as the dominant price signal may be trading the wrong variable.
4. Institutional Forecasts: A Comparison
The range of 2026 Brent crude forecasts from major institutions is unusually wide, reflecting genuine uncertainty about when Hormuz throughput normalizes:
U.S. Energy Information Administration (EIA): The EIA's May 2026 Short-Term Energy Outlook projects Brent averaging approximately $106/bbl in May and June as global inventories fall by an average of 8.5 million b/d in Q2. As Middle East production gradually recovers in H2, the EIA expects prices to fall to around $89/bbl in Q4 and $79/bbl as a 2027 average. Full-year 2026 average: approximately $96/bbl.
Goldman Sachs: As Bloomberg reported, Goldman raised its full-year 2026 Brent forecast to $85/bbl — up from a pre-war estimate of $77 — describing the Hormuz closure as "the largest-ever supply shock for the global crude market." Its current quarterly breakdown: Q2 at $90, Q3 at $82, Q4 at $80.
Morgan Stanley: Holds the most hawkish institutional view at $110/bbl for Q2, arguing supply recovery will take longer than consensus assumes.
Macquarie Group: In a scenario analysis cited by Seeking Alpha, Macquarie raised the possibility of oil spiking toward $200/bbl if the conflict extended into Q2 and the Strait remained closed. That extreme scenario has receded, but it underscores the asymmetric tail risks still embedded in the market.
BMI (Fitch Solutions): Has raised its 2026 average Brent forecast by $8.50/bbl, reflecting sustained disruption premium.
J.P. Morgan: Had forecast Brent averaging around $60/bbl for full-year 2026 before the conflict began. This pre-war figure is largely obsolete as a reference point.
5. Three Scenarios for the Remainder of 2026
Base Case — Phased Normalization (Highest Probability)
A partial diplomatic agreement is reached by mid-year, Hormuz shipping resumes gradually through Q3, and Brent drifts from current ~$100/bbl levels down toward the $80–$90 range by Q4. This broadly aligns with EIA and Goldman Sachs base cases. Supply does not fully normalize until 2027, but the market's risk premium compresses progressively.
Downside Case — Talks Collapse (Elevated Risk)
If negotiations break down and the Hormuz blockade persists into Q3, Macquarie's $150–$200 scenario moves from extreme to plausible. EY-Parthenon senior economist Lydia Boussour noted in CBS News coverage that even after conflict ends, supply chain "lingering impacts" are likely to persist through the full year, meaning a price collapse back to pre-war levels is structurally unlikely even in a relatively optimistic scenario.
Upside (For Oil Prices) Surprise — OPEC+ Delivery Gap
Even in a normalization scenario, OPEC+ announced production increases may fail to translate into delivered barrels. Multiple core OPEC+ producers are themselves affected by infrastructure damage or transit restrictions. Announced quotas and actual market supply remain disconnected, which could support prices above consensus forecasts even as geopolitical tension eases.
6. What This Means for Crypto and Digital Asset Investors
Oil price volatility is not just an energy sector concern. Its second and third-order effects reach across global financial markets, including digital assets.
Macro channel: Elevated oil prices feed directly into CPI. Historically, each $10/bbl increase in crude adds approximately 0.3–0.5 percentage points to global headline inflation. With Brent still above $100, the Federal Reserve and peer central banks face persistent pressure to maintain higher-for-longer rates, which constrains risk appetite across equities, crypto, and other risk assets simultaneously.
Safe-haven and alternative finance channel: Periods of geopolitical stress typically drive capital toward gold and the U.S. dollar. However, on-chain data from previous Middle Eastern crises has consistently shown elevated BTC and USDT transaction volumes in sanctions-affected or currency-crisis economies — where digital assets serve as genuine alternatives for value storage and cross-border transfer rather than speculative instruments.
Trading opportunity channel: For investors who want direct exposure to oil price movements, MEXC provides access to a broad range of commodity-linked instruments and futures contracts, with deep liquidity and up to 200x leverage for experienced traders who understand the associated risks.
7. MEXC Crypto Pulse Research Team — Exclusive View
The consensus narrative in oil markets right now is essentially: "Prices fall when talks progress, prices rise when talks fail." This is directionally correct but analytically shallow.
The more important signal is not the diplomatic headline itself, but the pace at which physical supply infrastructure can realistically come back online. Markets have repeatedly been surprised to the upside when ceasefire announcements failed to immediately move the physical barrel count. We expect this pattern to continue.
Our base view: the second half of 2026 will see oil prices enter a range-bound but persistently volatile phase — broadly lower than the April–May peak, but structurally higher than pre-conflict levels for the remainder of the year. Brent is unlikely to consistently trade below $80 in 2026 without a genuine, sustained resumption of Hormuz throughput, which ADNOC's own assessment suggests cannot be completed this year.
The more contrarian observation worth tracking: U.S. non-OPEC production in the Permian Basin and other shale plays is approaching record levels, incentivized by prices above $90/bbl. If Middle Eastern supply returns in 2027 simultaneously with peak U.S. output, the market could face a sharp bearish rebalancing heading into 2027–2028 — a dynamic that current institutional forecasts may be underweighting. Traders who are positioned for a simple "crisis ends, prices normalize gradually" arc may find 2027 more disruptive than expected.
FAQ
Q: How significant is the Strait of Hormuz for global oil supply?
A: The Strait of Hormuz is the world's most critical oil chokepoint. Under normal conditions, it handles approximately 20 million barrels per day of crude oil, petroleum products, and LNG — roughly 20% of total global energy trade. The 2026 conflict has effectively removed an estimated 14 million barrels per day of that flow, making it the largest single supply disruption in the modern history of oil markets.
Q: Could oil prices rise above $100 again even if talks continue?
A: Yes. Market pricing is highly sensitive to diplomatic signals, and any breakdown in negotiations — or evidence that infrastructure recovery will take longer than expected — could push Brent back above $110. Morgan Stanley's base case for Q2 is already $110/bbl. The ceasefire did not eliminate the underlying supply gap; it moderated the risk premium temporarily.
Q: Why can't OPEC+ simply replace the lost supply?
A: Several of the largest OPEC+ producers — including Gulf states — are themselves affected by the Hormuz closure and cannot ship additional barrels regardless of headline quota decisions. The disconnect between announced production increases and deliverable supply is one of the most analytically important but publicly under-discussed aspects of the current market.
Q: What happens to oil prices once a peace deal is signed?
A: Based on ADNOC's assessment, even an immediate end to hostilities would not restore full Hormuz throughput until Q1 or Q2 2027. Markets that price in a swift return to pre-war supply levels upon any deal announcement are likely to be disappointed. A peace deal will reduce the risk premium, but not eliminate the physical supply deficit.
Q: How does the Iran oil crisis affect Bitcoin and crypto markets?
A: Through two main channels. Macroeconomically, sustained high oil prices push inflation higher and delay central bank rate cuts, reducing risk appetite across all asset classes including crypto. On the demand side, in economies facing sanctions or severe currency devaluation, BTC and USDT historically see increased adoption as alternative financial tools — a pattern that tends to persist through geopolitical disruptions.
Q: Where can I trade oil-related assets and monitor these developments?
A: MEXC offers commodity-linked futures and a wide range of instruments tied to energy market movements, alongside the analytical tools needed to track geopolitical developments in real time.
Disclaimer
This article is provided for informational purposes only and does not constitute investment advice or a recommendation to buy or sell any financial product. Crude oil, energy assets, and related instruments carry significant market risk. Prices may move sharply and unpredictably due to geopolitical developments, policy decisions, and other factors outside anyone's control. Readers should conduct their own due diligence and consult a qualified financial adviser before making any investment decisions. Past performance is not indicative of future results.
About the Author
This article was produced by the MEXC Crypto Pulse Team — the research and content division of MEXC, one of the world's leading cryptocurrency exchanges. The team covers macroeconomic trends, geopolitical risk, and digital asset market dynamics to provide timely, data-driven analysis for global investors.
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The articles shared on this page are sourced from public platforms and are provided for reference only. They do not represent the position or views of MEXC. All rights belong to Oliver Hughes. If you believe any content infringes upon the rights of a third party, please contact service@support.mexc.com for prompt removal. MEXC does not guarantee the accuracy, completeness, or timeliness of any content and is not responsible for any actions taken based on the information provided. The content does not constitute financial, legal, or other professional advice, nor should it be interpreted as a recommendation or endorsement by MEXC. For expert insights and in-depth analysis, visit MEXC Learn.
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