Petroleum markets in the third quarter of 2026 experienced significant price increases for crude oil and petroleum products, driven by persistent military conflict in the Middle East, according to analysis by the U.S. Energy Information Administration (EIA). Crude oil prices demonstrated a steady upward trajectory throughout 3Q26 as markets responded to renewed military strikes in the region.
Brent crude oil futures began the quarter at $72 per barrel on July 1, marking the lowest price since February 26. This initial low reflected increased flows through the Strait of Hormuz in June following a Memorandum of Understanding signed on June 17. Following the resumption of military strikes on July 7, crude oil prices climbed sharply.
Brent futures passed the $100 per barrel mark on July 23 and subsequently traded within a $79-$98 range until September 8. During this period, daily price volatility was primarily driven by market responses to public statements from U.S., Iranian, and regional leaders regarding military operations and peace negotiations, alongside fluctuations in flows through the Strait of Hormuz and other supply disruptions affecting Russian oil export infrastructure. Prices surged past $100 per barrel again on September 9 following escalated military action against energy infrastructure.
Critical events included attacks on crude oil tankers, a U.S. blockade on Iranian oil exports, assaults on Saudi Arabia's East-West pipeline pumping stations, attacks on Saudi Arabian tankers around the Bab el-Mandeb Strait, and Ukrainian drone attacks on Novorossiysk, a major Russian Black Sea oil terminal. The easing of earlier mitigation measures also contributed to price increases. Since April, reduced crude oil imports to China had moderated global oil demand.
However, in 3Q26, China's crude oil imports increased compared to May and June levels, adding demand pressure back into the market. Simultaneously, releases from the U.S. Strategic Petroleum Reserve slowed significantly in September, limiting additional supply sources.
Brent crude oil futures peaked at $109 per barrel on September 15, while spot prices reached as high as $132 per barrel around the same time. Supply disruptions, particularly from Saudi Arabia, created additional downward pressure on spot prices as buyers struggled to secure short-term supply amid escalating military actions. Crude oil prices averaged approximately $104 per barrel during the final two weeks of the quarter as markets weighed ongoing peace discussions against the possibility of wider-scale conflict.
U.S. refinery margins strengthened alongside crude oil price movements. Refinery utilization averaged 95% in 3Q26, processing the largest volume of crude oil for any third quarter since 2019, when refining capacity was 4% higher. Motor gasoline, distillate, and jet fuel crack spreads—measures of refinery profit margins—all reached elevated levels.
The quarterly average gasoline crack spread more than doubled year-ago levels despite declining in the second half of the quarter, while distillate and jet fuel crack spreads nearly tripled their year-ago levels due to tight global supply conditions. Distillate fuel oil demonstrated the highest crack spreads, followed by jet fuel, reflecting disrupted refining activities in Russia, China, and the Middle East. These regions supply substantial shares of these fuels to global markets.
U.S. distillate supplies tightened due to elevated exports to markets experiencing supply shortages and higher import costs in regions such as the U.S. East Coast. As of the week ending September 25, U.S. distillate fuel inventories were 13% below the five-year average (2021-2025), while gasoline inventories were 7% below their five-year average and jet fuel inventories were 3% above their five-year average.
Source: U.S. Energy Information Administration (EIA), Bloomberg L.P., Reuters
Source: eia.gov