Iran war will upend energy markets for the rest of the year

What began as targeted strikes has become a sustained military confrontation, and restoring normal trade flows through the Strait of Hormuz is proving far more difficult than initially anticipated. We therefore now assume a more severe and prolonged disruption to Gulf supply.

What you will learn in this report:

• We have substantially upgraded our oil price forecasts, expecting Brent to average $114 per barrel in Q2. We assume transit returns in May at around half of pre-conflict levels, with trade disruption easing slowly through the rest of 2026.
• Around 7mbpd of the 18mbpd that normally transits the Strait is being re-routed through pipelines to Yanbu and Fujairah. We estimate that the average Q2 supply disruption will be around 7.5mbpd, as some seaborne flows return in May.
• We have also substantially upgraded our gas price forecasts and now see the European benchmark TTF price at $17/MMBtu in Q2, 61% above our pre-conflict baseline.