The impact of the conflict in the Middle East (especially around the Strait of Hormuz and Iran) on the price of oil is very interesting because it shows a historical disconnect between the physical and financial markets caused by an immediate shortage of barrels.
The key point about the current situation and how it differs from the dynamics of previous years is the enormous impact of the conflict. Six weeks after the outbreak of hostilities, the magnitude of the supply shock is unparalleled. It is estimated that 13 million barrels of daily production remain shut down. The accumulated losses amount to 550 million barrels, divided between crude oil (350M) and refined products such as diesel and jet fuel (200M). Although ships have occasionally been sighted exiting the Strait of Hormuz, the lack of comprehensive diplomatic agreements and the blockade rhetoric suggest that any recovery of exports will be slow.
This enormous impact explains the price anomaly between “physical” oil and “paper” oil (futures). The main feature of this conflict is the unprecedented divergence in the Brent complex. While the ICE Brent futures contract (paper oil) is trading around $100 per barrel, physical oil is trading above $130.
This gap of more than $30 is an all-time high (the normal range is +- $3 per barrel). It is not a broken market, but a system that identifies where the problem is most acute: immediate scarcity. Refineries in Europe are scrambling to secure physical shipments available now to replace lost Gulf barrels, driving up early delivery premiums.
Why is it different from previous years? Unlike previous crises where the entire price complex rose in unison, this time the financial market (futures) shows some restraint and reflects the belief that the flow through Hormuz will be restored in the medium term. However, the physical market is in an extreme state of backwardation (the current price is much more expensive than the future price).
There is an additional problem that is also very striking. A migration of stress is observed. The conflict began as a problem of access to oil for Asia, but now it has shifted to the Atlantic. Asia is “sucking” barrels from the Atlantic basin (such as the US WTI Midland), which is driving up the price of physical Brent crude in Europe dramatically.
In addition, logistics and freight costs must be taken into account. The cost of moving oil and the disruption of supply chains have fragmented the market. Restarting these routes after a crash is not instantaneous. It will take months (estimated until October) to reach normality.
All of this creates a new set of rules for the game. The major structural difference for the future is that, even if the Strait of Hormuz reopens, the market will not return to its previous “normal.” Risk perception has changed, and therefore a structural premium will exist if Iran maintains influence over Hormuz. 20% of the global supply is exposed. This gives Brent crude a permanent risk premium. In addition, strategic inventories will be established. Countries will tend to increase their safety stocks, thereby raising structural demand and keeping trade inventories tighter.
In conclusion, the conflict has raised oil price estimates not only in the short term, but also in the medium and perhaps long term due to a combination of real physical scarcity and a change in the psychology of global energy security.
Date of report: April 20th 2026