When the United States and Israel launched military operations against Iran at the end of February 2026, analysts rushed to warn that crude oil could surge to $150 or even $200 per barrel, given that roughly one fifth of global supply transits the vital Strait of Hormuz. Five months later, those dire predictions have not materialized — and energy market observers are now asking why. According to a Reuters analysis published on July 20, 2026, Brent crude futures peaked around $126 per barrel during the conflict, comfortably below the all-time high of $147 recorded in 2008.
Between the start of hostilities on February 28 and June 11, when U.S. President Donald Trump called off strikes on Iran, Brent averaged just $101 per barrel before briefly retreating to pre-war levels of around $70 in early July. The single biggest factor dampening the price surge has been China.
The world's largest oil importer slashed crude imports to their lowest level in nearly a decade by June, according to Reuters. Chinese fuel exports were curbed, the population shifted toward electric taxis instead of personal cars, and the country's petrochemical sector also reduced volumes, collectively removing a significant source of global demand at a critical moment. On the supply side, the United States, the world's largest oil producer, ramped up output to a record 13.93 million barrels per day by April, according to the U.S.
Energy Information Administration. Washington also coordinated with the International Energy Agency to release crude from the Strategic Petroleum Reserve as part of a record 400 million-barrel release announced in March, helping to cushion the impact of Hormuz supply disruptions. President Trump himself proved to be a recurring source of market uncertainty.
By repeatedly making statements about potential peace agreements and the resumption of flows through the Strait of Hormuz, Trump wrong-footed bullish traders on multiple occasions, reducing their appetite for large long positions. "Everybody is bullish now, but nobody is long," said Ilia Bouchouev of the Oxford Institute for Energy Studies. Data from the ICE exchange showed that funds drove their bullish position in Brent futures to its smallest level of the year in early July, before making their largest single-week addition in six months in the week ending July 14.
Even so, that position remained more than 50% below its late March six-year peak. Ole Hansen, head of commodity strategy at Saxo Bank, attributed part of the market's muted response to "headline fatigue," which reduces the price impact of fresh conflict-related announcements. Saudi Arabia contributed to price stability by sharply increasing shipments from its Red Sea Yanbu port, helping to offset barrels that could no longer transit the Strait of Hormuz.
Hormuz shipments briefly restarted in June, easing supply fears, before dropping again in July as fighting resumed. Finally, physical crude markets have remained well-supplied. Traders note that prompt physical cargoes are ample, limiting the price reaction to the latest escalation.
North Sea Forties crude, which helps set the global Dated Brent benchmark, has fallen to a discount from the record premium it commanded in April. "There is a lot of prompt crude around for now," said veteran trader Adi Imsirovic, adding the caveat: "It may not last!" The article was reported by Anushree Mukherjee in Bengaluru, with additional reporting by Robert Harvey and Amanda Cooper, and editing by Dmitry Zhdannikov, Alex Lawler and Kirsten Donovan, for Reuters.
Source: reuters.com