The global oil commodity market is experiencing, at the end of May 2026, perhaps the most severe supply shock since the oil embargo of the 1970s. The conflict in the Middle East, which has led to a de facto blockade of the Strait of Hormuz, has radically altered global supply and demand balances. However, in recent days, signs of possible de-escalation have emerged, forcing traders to price in both the persistence of the deficit and the risk of a price crash in the event of a political settlement.
The Hormuz Crisis as the Main Driver
The key factor shaping the situation remains the Strait of Hormuz. Since late February, virtually no tankers have been moving through this strategic artery, through which approximately 20% of global oil previously passed. According to the International Energy Agency (IEA), total oil production in the Gulf countries has fallen by 14.4 million barrels per day (b/d) compared to pre-war levels.
This has led to a record drawdown in inventories. In March and April alone, global oil inventories shrank by 250 million barrels, equivalent to a drop of 4 million b/d. Goldman Sachs estimates the pace of inventory drawdowns in April as unprecedented 11-12 million b/d, marking the fastest inventory withdrawal in the history of observations.
Price Situation Above $100 and Correction Risks
Oil prices have surged sharply. In April, North Sea Dated (Brent) briefly exceeded $120 per barrel. By the end of May, prices stabilized in the range of $90–100 per barrel, reflecting tension but without the panic premium.
Analysts have drastically revised their annual forecasts. Consulting firm Kept raised its 2026 average Brent price forecast to $78.6, even though in January it had expected a drop to $62. Fitch Ratings also raised its forecast to $87. The rating agency expects that in 2026 Brent will cost $87 per barrel, and U.S. WTI will cost $80.
However, recent dynamics show the vulnerability of these figures. As soon as news emerged about the possible resumption of shipping through Hormuz (as of May 27, Iran received a draft agreement with the U.S.), the market began pricing in a correction. UBS forecasts that in the event of a rapid restoration of traffic through the strait, Brent could fall back to the $80-85 range.
Demand Is Being Destroyed to Save the Market
The paradox of the current crisis is that high prices themselves are limiting demand, preventing a total system collapse.
In May, the IEA for the first time since the pandemic forecast a drop in global demand in 2026 - by as much as 418,000 b/d. This is a sharp change in conditions: at the start of the year, growth was expected. The main contribution comes from Asian countries: China has cut purchases by 3.6 million b/d compared to February, Japan by 1.9 million b/d, and India by 760,000 b/d. Refineries are reducing utilization, airlines are cutting flights, and some governments are imposing fuel-saving measures.
Investment Landscape
The crisis has provoked an unexpected reaction from investors. Instead of investing in expanding production outside the conflict zone, global capital is fleeing the oil sector. According to the IEA’s World Energy Investment 2026 report, upstream oil investments have been declining for the third consecutive year.
Record amounts are flowing into green energy and grid infrastructure. At the same time, there is a boom in investments in gas (up 10% to $330 billion) and, tellingly, in coal (the highest in 14 years) as a cheap and reliable alternative. Major banks are building into their models the risk that even after the strait reopens, trust in the Gulf region will be undermined for years.
Conclusion
The oil commodity market is now a powder keg packed with record deficits. Prices of $100 reflect not fundamental value but extreme nervousness. Until July–August 2026, the market will balance on the edge, and its future depends exclusively on political decisions, not on economic multipliers.