Paris, April 28, 2026, 13:03 (CEST)
The oil shock triggered by the Iran war is morphing into more than just a surge in prices, according to International Energy Agency chief Fatih Birol. In his words to the Guardian, the crisis has shattered faith in fossil fuels and will leave “permanent consequences” on global energy markets. “The vase is broken, the damage is done,” Birol said. The Guardian
The warning came as Brent crude jumped to $111.22 a barrel on Tuesday, while U.S. West Texas Intermediate hovered close to $99. Disruptions in shipping through the Strait of Hormuz followed stalled U.S.-Iran negotiations. “Oil above $110 is evidence that markets are repricing geopolitical risk,” said Jorge Leon, an analyst with Rystad Energy. Reuters
Crude isn’t the only concern at this point. With fuel flows still limited, the shock is filtering through to inflation, central bank moves, and what households are paying. “If the main oil routes keep getting held up, higher energy costs could start to really bite,” warned Matt Britzman, senior equity analyst at Hargreaves Lansdown. Reuters
The Strait of Hormuz, a crucial shipping artery for global oil and gas flows, remains a key risk zone. According to the IEA, any disruption in the area—especially paired with assaults on energy facilities nearby—could threaten energy security, rattle affordability, and hit the global economy hard.
Speaking to CNBC last week, Birol called the situation the “biggest energy security threat in history,” citing a loss of roughly 13 million barrels per day of oil supply. The usual industry shorthand for daily oil volume is barrels per day, or bpd. Instead of quick fixes, he argued, the real solution is to reopen Hormuz. Daily Sabah
Demand is already taking a hit. According to the IEA’s April Oil Market Report, oil demand will shrink by 80,000 bpd this year, with a sharp 1.5 million bpd drop forecast for the second quarter—the biggest drop-off since the Covid-era slump. When demand collapses, it’s a signal that high prices or tight supply are forcing both companies and consumers to cut back on fuel.
Asia is feeling the brunt first. According to Reuters, crude imports across the region look set to drop 22% in April, hitting a decade low. That’s pushing refineries to pull back on processing and shift toward lighter crude grades—yields for diesel and jet fuel take the hit. April middle-distillate losses, primarily diesel, should land somewhere between 1.8 million and 2.0 million barrels per day, Kpler’s Sumit Ritolia figures.
The Wall Street Journal has charted the ripple effect of the energy crunch, which is now reaching far past the Gulf. Shortages and wild price moves are hitting Europe, North America, Asia, and Africa. There’s no uniform story: low-income countries are staring down energy poverty, while wealthier nations are juggling coal, nuclear, and speeding up clean-energy projects.
IEA members turned to emergency reserves in March, signing off on a release of 400 million barrels—the biggest ever, according to the agency. That injection buys some relief at the edges but leaves pipelines, refineries, and trust untouched.
Policy moves are happening quickly. Roughly 60 governments are gathering this week in Santa Marta, Colombia, for talks on winding down fossil fuel use—though the United States, China, and the key Middle Eastern suppliers are not on the guest list. Stientje van Veldhoven, Dutch climate minister, put it plainly: “the less you are dependent on it, the less vulnerable you are.” Reuters
Oil producers are still seeing hefty profits for now. BP’s first-quarter earnings shot up, more than doubling to $3.2 billion, as war-fueled swings in oil prices juiced its trading desk. According to Reuters, European majors have pulled in billions thanks to the squeeze on supply. Eni is moving to hand back more cash to shareholders. Still, for BP and its rivals, there’s a catch: this round of windfalls could end up accelerating the move away from oil altogether.
The direction isn’t locked in. Goldman Sachs bumped up its Brent forecast for Q4 to around $90 a barrel, but said prices could touch $120 if Gulf exports take longer to normalize and capacity suffers lasting impacts. On the flip side, if exports rebound quickly and supply catches up, the bank’s more optimistic scenario puts Brent under $80.
The biggest question hanging over the region is just how fast the war’s destruction can be reversed. Gulf countries, which typically benefit from rising oil prices, are now staring at their steepest slump since the pandemic, Reuters said. Damaged energy infrastructure and the near-shutdown of the Strait of Hormuz have hammered refineries, gas facilities, tourism, and trade. S&P Global Market Intelligence’s Ralf Wiegert doesn’t see a “simple return” to how things looked before the conflict. Reuters
