Disruptions to crude and product flows through the Strait of Hormuz drove crude oil prices higher and more volatile through most of the second quarter of 2026, the U.S. Energy Information Administration says. The same disruptions lifted U.S. refinery margins, production, and exports to record levels, and renewed U.S.-Iran fighting now threatens the recovery in Gulf shipping.
Repeated disruptions to crude oil and petroleum product flows through the Strait of Hormuz pushed crude oil prices higher and more volatile through most of the second quarter of 2026, according to the U.S. Energy Information Administration. Those disruptions also sent international buyers seeking alternative supply sources for oil, which drove up U.S. refinery margins, production, and exports.
Brent swung between $118 and $72
The front-month futures price of Brent crude traded between a high of $118 per barrel on April 29 and a low of $72 on June 26. Brent started the quarter above $100 a barrel as blocked flows through the strait cut access to crude and led many Middle East countries to shut in production.
Uncertainty over reopening the strait fed the volatility: the Brent price moved an average of $4 a day in April and May, against $1 in the same months of 2025. Then, from May 18 to June 17, ceasefires and anticipation of resumed shipping pulled Brent down by an average of more than $1 a day. Washington and Tehran signed a Memorandum of Understanding on June 17 that sought to restore traffic through the waterway, and prices generally fell through the rest of the quarter before rising again in early Q3 on renewed military strikes.
Record exports and fat refinery margins
Prices fell in the second half despite large inventory draws. The EIA estimated average global crude inventory declines of 5.1 million barrels a day in Q2 2026, while U.S. commercial stocks dropped to their lowest seasonal level since 2014. Record exports and high refinery runs drove those drawdowns.
U.S. refineries processed the most crude for the quarter since 2019, when capacity was 4% higher. Margins were rich: the quarterly average gasoline crack spread rose 60% from a year earlier, and distillate and jet fuel crack spreads more than doubled. U.S. distillate exports averaged 1.56 million barrels a day and jet fuel exports 356,000, both records.
China's return could tighten the market again
The balance could change again. China's step back from buying during the conflict left more barrels for other buyers, but a MarketScreener report says that pause might be nearing an end. Chinese crude imports plunged more than 40% in June from a year earlier as refiners drew on inventories instead of competing for cargoes.
A recovery in Chinese demand alongside constrained Gulf supplies could significantly tighten the market. Gulf exports recovered to more than 80% of preconflict levels after the interim deal, then fell back below 50% after fresh attacks this month, according to Goldman Sachs. The bank expects Brent to average $80 a barrel in the fourth quarter but warns prices could climb above $110 this year if flows fail to rebound.
Sources: U.S. Energy Information Administration (EIA), MarketScreener
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