2026 Oil: War‑Driven Spikes on Top of a Soft Market
Oil has already traded through a full cycle in 2026: from triple‑digit spikes on war headlines to forecasts that still see prices averaging much lower once the market digests the shock. The tension between those spot prices and softer underlying balances is the core story investors have to navigate.
Prices So Far in 2026
Brent spent the opening months of 2026 whipsawing higher as conflict in the Middle East escalated and flows through the Strait of Hormuz were disrupted.
On 3 April 2026, Brent was quoted around 112 dollars per barrel, according to one widely cited benchmark snapshot.
By mid‑April, some benchmarks and data vendors were still posting Brent in the 90–100 dollar range, with intraday levels and futures suggesting that “100 is back in play.”
Another daily snapshot on 17 April put Brent near 96 dollars per barrel, underlining how elevated spot prices remain versus pre‑conflict levels.
Analysts estimate that the Iran war and associated shipping disruptions have boosted oil prices by roughly 50% compared with levels before the conflict intensified. The squeeze has fed through into refined products and inflation data, prompting fresh political attention on energy costs.
What’s Driving the Market
Two forces are pulling in opposite directions: a large, sudden supply shock and still‑soft medium‑term fundamentals.
On the one hand, the International Energy Agency has described the Iran war as the largest oil supply disruption on record, with output losses and transit issues in the Gulf materially tightening near-term balances. The Organisation of the Petroleum Exporting Countries has cut its second‑quarter 2026 oil demand forecast by about 500,000 barrels per day, reflecting both higher prices and the conflict’s impact on economic activity.
On the other hand, most structural analyses still point to supply outpacing demand over 2026 as a whole. J.P. Morgan, for example, argues that global oil supply is set to exceed demand and that “oil surplus was visible in January data and is likely to persist", absent significant additional production cuts. Before the latest shock, the IEA and others projected a surplus approaching 3 million barrels per day later this year, driven by non‑OPEC growth and unwinding OPEC+ cuts. That surplus hasn’t disappeared; it has just been overshadowed by the war‑related shortfall in the near term.
Where Forecasters See Prices Going
The gap between current spot prices and year‑end forecasts is wide.
J.P. Morgan’s Global Research desk, even after updating its deck post‑rally, expects Brent to average in the high 50s to around 60 dollars per barrel in 2026, arguing that once the disruption eases and surplus barrels re‑emerge, prices will drift lower.
Earlier bank forecasts had already trimmed 2026 targets into that zone: one revision cut a prior Brent estimate from 61 dollars to 58 dollars for 2026, reflecting weaker demand and higher non‑OPEC supply.
By contrast, ANZ and a cluster of more bullish houses have marked their 2026 Brent forecasts sharply higher after the Iran shock. ANZ now expects Brent to trade above 90 dollars for much of 2026 and end the year around 88 dollars per barrel, up from an earlier assumption closer to 80 dollars.
A Reuters survey cited by analysts notes that the war has prompted an average 30% upward revision in 2026 Brent forecasts, to roughly 82–83 dollars per barrel, even as some institutions stick to lower “through‑cycle” views.
In futures markets, April 2026 Brent contracts have recently changed hands in the high‑80s to low‑90s, well below the early‑April spot peaks but still far above the 50–60‑dollar levels embedded in some bank decks.
The Balance of Risks: What Matters from Here
For the rest of 2026, price direction will hinge on three moving parts:
Conflict path and Gulf exports: If the Iran war escalates or keeps key shipping routes constrained, the market could stay tight and validate the 80–90‑plus-dollar scenarios. Any durable ceasefire and restoration of pre‑conflict production would swing attention back to the structural surplus and support the bearish camp’s high‑50s to 60‑dollar view.
OPEC+ strategy: With demand growth slowing and non‑OPEC supply still strong, OPEC+ decisions on whether to deepen, extend or unwind cuts will determine how much of the projected surplus hits the market. A more aggressive defence of a price floor would tighten balances; a faster normalisation would reinforce downward pressure.
Macro and demand: Higher prices are already prompting OPEC to trim demand expectations, and forecasters warn that sustained triple‑digit crude could dampen growth, particularly in price‑sensitive emerging markets. A weaker macro backdrop would increase the chances that prices gravitate toward the lower end of current forecasts once the immediate supply shock fades.
For now, 2026 is shaping up as a year where headline prices tell a very different story from the underlying balances. Spot crude is trading like a supply‑shock market; most medium‑term research still writes 2026 as a surplus year that will eventually pull Brent back toward a lower anchor. The timing and path between those two states – not just the endpoint – is where the risk, and the opportunity, sits.