Crude Oil's Three-Year Power Shift: Market Balance to Geopolitical Shock

Key Takeaways

• Brent crude prices moved above $80 /bbl. in Q1 2026, rebounding from the $65–70 range seen in Q3–Q4 2025, marking an increase of roughly 18–20%. The rise was largely driven by supply cuts from OPEC+, which tightened global crude oil supply and supported prices.
• Crude Oil markets remained relatively stable across 2024, with Brent trading largely between $75 and $82/bbl, supported by OPEC+ production discipline and balanced demand.
• Prices softened through 2025, averaging around $65–70/bbl, compared with the high-$70 to low-$80 range seen in 2024, representing a decline of roughly 14–15% as global supply growth outpaced demand.
• Escalating tensions involving Iran, Israel, and the United States in Q1 2026 have added a geopolitical risk premium, raising concerns about disruptions to global crude oil supply routes.
• The Strait of Hormuz remains a critical energy chokepoint, with roughly 20% of global crude oil supply passing through the corridor, making the region highly sensitive to geopolitical developments.

Crude Oil Prices Recover as Geopolitical Risks Intensify

Crude Oil prices moved higher in Q1 2026 as tensions between Iran, Israel, and the United States increased concerns about disruptions to global crude supply routes.

Brent crude rose above $80 per barrel in Q1 2026, compared with the $65–70 range recorded during most of 2025, reflecting the return of a geopolitical risk premium in energy markets. Commodity market data indicate prices traded near $80–85/bbl. during Q1 2026.

Energy markets remain particularly sensitive to developments in the Middle East, which accounts for a significant share of global crude oil production and exports.

Crude Oil Price Trend: 2024–2026

Crude Oil markets remained relatively balanced across 2024, when Brent crude traded largely in the high-$70 to low-$80 range. Production discipline from OPEC+ and steady global demand helped maintain price stability.

During 2025, prices declined toward the mid-$60 range, representing a drop of roughly 10–15% compared with 2024 levels, as rising production from non-OPEC producers increased global supply.

However, in Q1 2026, prices rebounded above $80 /bbl. as geopolitical tensions returned to the forefront of global energy markets.

Geopolitical Tensions and the Strait of Hormuz

Developments in Q1 2026 involving Iran, Israel, and the United States have increased uncertainty in global crude oil markets. Military tensions and retaliatory actions in the region have raised concerns about potential disruptions to crude oil infrastructure and export routes.

A key focus for energy markets is the Strait of Hormuz, one of the world's most important crude oil transit routes. Roughly 20 million barrels of crude oil per day—around 20% of global crude oil supply—passes through the strait, making it a critical corridor for global energy trade.

Because such a large share of global crude oil exports flows through this corridor, any disruption to shipping activity can quickly influence crude oil prices.

Key Drivers of Crude Oil Price Movements

Several structural factors continue to shape crude oil prices alongside geopolitical developments.

OPEC+ Production Policies Production decisions by OPEC+ play a key role in balancing global crude oil supply.

Global Supply and Demand Economic growth directly affects energy consumption across transportation, industry, and logistics sectors.

U.S. Shale Production Rising shale output in the United States has expanded global crude oil supply in recent years.

Geopolitical Risk Conflicts in major crude oil-producing regions can disrupt supply chains and increase price volatility.

Crude Oil Market Outlook

According to J.P. Morgan Research, global crude oil demand growth is expected to remain moderate, while supply is set to increase from 2026 onward.

Several crude oil-producing countries are expanding production capacity. The United Arab Emirates (UAE) is increasing output from major fields, including Upper Zakum, Lower Zakum, Umm Shaif, Bab, and Bu Hasa, adding roughly 200 thousand barrels per day (kbd) of new capacity annually in 2026 and the following years.

Other producers are also expanding supply. Kazakhstan has added around 200 kbd of capacity at the Tengiz crude oil field, while production in the Saudi–Kuwaiti Neutral Zone is expected to increase by about 40 kbd.

Industry estimates suggest that major international crude oil companies will invest more than $10 billion per year in Middle East upstream crude oil projects between 2025 and 2027, which will support further production growth.

With supply increasing across several producers, analysts warn that global crude oil markets could face oversupply risks from 2026 onwards, which may put downward pressure on crude oil prices in the coming years.