The energy market spent the second quarter of 2026 caught between geopolitical turmoil and shifting supply expectations, with oil and natural gas prices fluctuating wildly as the Iran war continued.
In the oil market, investors are weighing the impact of conflict in the Middle East against the prospect of increased production from major producers of the fuel. The natural gas industry is also facing widespread disruptions, with sector participants working to establish new trade routes due to the Strait of Hormuz closure.
As Q2 wraps up, multiple paths forward are open for both oil and natural gas.
What happened to oil prices in Q2?
As April began, both oil benchmarks were sitting above US$100 per barrel level.
Brent crude was priced at US$101.11, just off its high for the first quarter of US$111.94, set on March 20; meanwhile, West Texas intermediate (WTI) crude started the three month period at its Q1 high of US$102.91, set on March 30.
As Q2 progressed, global energy flows continued to be upended by tensions surrounding Iran and the blockade of Strait of Hormuz, a crucial waterway through which one-fifth of global oil passes, reviving concerns about supply security and inflation, and pushing prices for oil higher. The price of WTI hit a 46 month peak on April 7, reaching US$112.84. This 2026 high marked a significant 97.8 percent surge from US$57.04, WTI’s price at the start of 2026.
The Brent benchmark, which has greater global exposure, climbed to a high of US$114.47 in Q2. This peak also marked a 46 month high, and represented a massive 90 percent increase compared to its price of US$60.24 in January.
By mid-May, on-again, off-again peace and ceasefire negotiations had renewed hopes for the reopening of the strategic shipping corridor. These developments quelled price growth, with both Brent and WTI slipping below US$100.
Meanwhile, OPEC+ policy shifts, the United Arab Emirates’ departure from the producers’ group and ongoing uncertainty surrounding global demand added further volatility to an already turbulent market.
Promises of a peace truce and a signed memorandum of understanding between the US and Iran in mid-June pushed Brent prices to US$79.57 and WTI to US$76.74 on June 17, levels last seen in March.
As Q2 came to a close, investors were left assessing whether the quarter’s oil price spike represented a temporary geopolitical premium or the beginning of a longer-term shift in energy markets.
Hormuz closure triggers supply chain shockwaves
Few events in Q2 were as impactful for oil as the continued blockade of the Strait of Hormuz.
After the waterway’s February 28 closure, ripple effects reverberated across global supply chains still fragile from COVID-19 disruptions. During a podcast interview with the Investing News Network (INN), retired US Navy Commander Phil Ehr explained that the disruption has had multiple cascading effects beyond the obvious spike in oil prices.
Listen to the full interview to hear Ehr’s thoughts on energy security risks and copper’s role in the energy transition.
“It’s raising the cost of everything in the supply chain,” Ehr said during the interview.
Beyond energy, the strait’s closure has restricted the availability of sulfuric acid, a key input in copper mining. Much of that acid originates in the Northern Arabian Gulf and must transit south to smelters in Africa, Chile and China.
What happened to natural gas prices in Q2?
Although LNG price fluctuations remained more muted than those of oil over the 90 day period, concerns that a shortage will materialize ahead of the key winter demand season supported price movements.
After starting the year at US$3.63 per million British thermal units, natural gas prices spiked in late January to a year-to-date high of US$5.04. Prices fell to US$3.50 at the start of February and have remained below that level since.
Recent Wood Mackenzie research explores three potential paths for international LNG markets in the wake of the Strait of Hormuz blockade, analyzing a reopening in June 2026, September 2026 and sometime in 2027. According to the firm, ongoing regional hostilities have effectively sidelined over 80 million metric tons per year of capacity.
Even in the “quick peace” scenario, the firm doesn’t see LNG markets beginning to soften until 2028. The “extended disruption” outlook sees tightness persist through 2030, with oversupply risk after that point.
“The Strait of Hormuz closure has done more than remove LNG from the market. It has removed certainty. There is no longer consensus on how the market evolves,” wrote Kateryna Filippenko, research director of global gas markets.
“Volatility is the new baseline. The question for buyers, investors, and policymakers is not which scenario proves correct. It is whether their portfolios and supply strategies are resilient enough to absorb any of them.”
War could redraw natural gas trade routes
Adding to the challenges of the blocked shipping lane, attacks on Qatari liquefied natural gas (LNG) infrastructure also raised concerns and shocked supply in the second quarter of the year.
By mid-April, sector participants were considering alternate routes and sources of LNG supply, sources told Reuters.
European buyers, including Germany’s Uniper (ETR:UN0,OTCPL:UNPRF), were reportedly in talks with Ksi Lisims LNG in the Canadian province of BC. For their part, major players Shell (NYSE:SHEL) and TotalEnergies (NYSE:TTE) have already signed 20 year offtake agreements with the proposed Canadian terminal. One source told the news outlet that the war has driven “especially strong interest” from buyers worldwide, including Europe.
Canada’s LNG sector has historically focused on Asia, and shipping to Europe requires navigating the Panama Canal. But the conflict has shifted buyers’ risk calculus toward stable jurisdictions.
In a March 31 statement, TC Energy (TSX:TRP,NYSE:TRP) CEO François Poirier called the disruption “a generational opportunity” for Canada, warning that the country must move faster to compete with the US, which has opened eight LNG terminals since 2016.
Europe’s new gas supply corridors take shape
Looking to Europe, efforts to reduce reliance on Russian natural gas continued to gain momentum in Q2, with analysts increasingly focused on how new supply corridors could reshape energy flows across Central and Eastern Europe over the coming years. June 10 analysis from ICIS received by INN suggests the region’s gas balance could improve significantly by 2028, even after the expected phaseout of remaining Russian pipeline imports.
The shift is expected to be driven by two emerging supply hubs: Poland in the north and Romania in the south.
Romania’s offshore Neptun Deep natural gas project is central to that outlook.
Expected to begin production in 2027, the Black Sea development could add roughly 8 billion cubic meters of annual gas supply, positioning Romania as the European Union’s largest gas producer.
“The Romanian government’s stance on pre-emption rights will be pivotal for regional gas markets,” ICIS analysts wrote, noting that decisions regarding domestic allocation versus exports could determine whether regional buyers gain access to Romanian gas or are forced to rely on more expensive alternatives. Meanwhile, Poland is strengthening its role as a northern gas gateway through expanded LNG import capacity and cross-border infrastructure upgrades.
Still, ICIS cautions that infrastructure alone will not guarantee greater regional supply, arguing that market fundamentals and available volumes remain more important drivers of future gas flows than transportation tariffs or pipeline capacity.
Fitch trims global growth outlook as oil shock bites
In its June Global Economic Outlook, international credit agency Fitch Ratings notes that in response to the Iran war it is cutting its global growth forecast for 2026 by 0.2 percentage points to 2.4 percent.
The downgrades come as rising inflation squeezes real wages, dampens consumption and raises input costs across industries. But the damage is being cushioned by stronger-than-expected artificial intelligence investment, which is supporting world trade and Asian exports. Fitch Ratings has raised its China forecast by 0.3 points to 4.6 percent, and its Korea outlook is also up following surprisingly strong Q1 data and the tech boom’s export uplift.
US growth expectations have been cut 0.3 points to 1.9 percent since March, while the Eurozone fell 0.4 points to 0.9 percent. Emerging markets excluding China slipped 0.2 points to 3.2 percent.
“We assume (the Strait of Hormuz) will not start to reopen until July. We have revised our 2026 average price assumption for Brent crude to US$87/bbl,” the Fitch Ratings report states. “The oil shock is a strong headwind to world growth, but our base case is far less severe than the pernicious oil shocks of the 1970s.
According to the firm, crude values peaked at US$170 in 1979. In the decades since then, OPEC+ has transformed its market influence and global petroleum usage has changed.
The proportion of global GDP attributed to oil consumption has been reduced by 50 percent since 1980.
“Nevertheless, with geopolitical uncertainties remaining high, we have also examined an adverse scenario where oil prices average US$100/bbl in 2026, equity prices fall by 10 percent and credit conditions tighten,” the report cautions.
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Securities Disclosure: I, Georgia Williams, hold no direct investment interest in any company mentioned in this article.
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