#OilPricesResumeUptrend

Oil prices have resumed their upward trajectory heading into the final trading session of March 29, 2026, building on a powerful rally that pushed Brent crude to its highest levels in more than three years. As of Friday's close, Brent crude was quoted at approximately 112 dollars per barrel, while WTI settled near 98 dollars, with both benchmarks posting gains of more than 4 percent in a single session. The move marks a decisive continuation of the broader uptrend that has defined crude markets throughout this month, driven by a convergence of geopolitical disruption, constrained supply, and receding hopes for a near-term diplomatic resolution in the Middle East.

The central driver behind this renewed push higher is the ongoing military conflict involving the United States, Israel, and Iran, which has triggered what the International Energy Agency described as the largest oil supply disruption in global market history. Prior to the outbreak of hostilities, the Strait of Hormuz was handling approximately 20 million barrels per day of crude oil and petroleum products, representing roughly 20 percent of the world's total seaborne oil trade. Since the conflict escalated, flows through the strait have collapsed to what the IEA calls a trickle, with Gulf producers forced to cut total output by at least 10 million barrels per day. The ripple effects of this disruption are now being felt across every corner of the global energy complex.

Attempts to compensate for the lost Hormuz volumes through alternative routes have provided only partial relief. The UAE has ramped up crude exports from the port of Fujairah via the Habshan pipeline, which is now operating near its capacity limit, redirecting flows that would otherwise transit the Persian Gulf. Saudi Arabia has similarly increased utilization of the Yanbu terminal on the Red Sea coast. However, the combined capacity of all available bypass infrastructure is estimated at only 4 to 7 million barrels per day, leaving a structural supply shortfall of between 7 and 12 million barrels per day in the near term. That gap is simply too large to bridge through logistics alone, and the physical market is beginning to feel the squeeze in a way that financial market pricing is only now starting to fully reflect.

A key dynamic that market participants have been paying close attention to is the divergence between paper and physical prices. While financial market benchmarks have moved aggressively higher, traders and executives attending industry conferences this week noted that physical delivery premiums in certain Asian markets have begun to surge independently, as refiners scramble to secure alternative crude supplies from West Africa, the Americas, and North Sea sources. Ben Cahill, director for energy markets and policy at the Center for Energy and Environmental Systems Analysis at the University of Texas at Austin, highlighted this distinction as central to understanding how much further the shock could escalate if Hormuz remains closed. The market has essentially been operating with a cushion of strategic reserves and diverted flows, but that cushion has a finite lifespan.

The IEA's emergency response remains one of the few meaningful countervailing forces in the current market. Earlier this month the agency authorized the release of a record 400 million barrels from member nation strategic reserves, with the United States contributing the largest share. This coordinated release temporarily arrested a price spike that had sent Brent toward 113 dollars following Trump's announcement of military operations, and it succeeded in pushing crude back down to approximately 101 dollars during a brief period of diplomatic optimism in the middle of last week. That optimism centered on reports that the Trump administration had proposed a five-day diplomatic pause and had submitted a written plan to Tehran outlining conditions for a ceasefire. Oil markets responded sharply to those signals, with prices briefly pulling back 6 percent before the rally resumed as talks failed to produce a concrete agreement by the weekend.

Goldman Sachs responded to the evolving situation by raising its 2026 Brent crude average price forecast by 8.85 dollars per barrel, now anticipating that flows through the Strait of Hormuz will operate at only around 10 percent of normal capacity for at least 21 days before a gradual recovery. The bank also cautioned that if the disruption extends into April and beyond, prices could potentially challenge the 2008 historical peak. That scenario is being taken seriously by analysts who note that the world has already lost between 4.5 and 5 million barrels per day through roughly the third week of April, amounting to approximately 5 percent of total global supply at a time when OECD strategic reserve volumes are being drawn down at an unprecedented rate.

The broader equity market has absorbed these energy price shocks with significant difficulty. Major indexes have now posted losses for five consecutive weeks, with the Dow Jones Industrial Average shedding another 750 points on Friday as oil's renewed surge compounded investor anxiety over inflation and corporate profit margins. Energy sector stocks have been a notable exception, with upstream producers in North America and non-OPEC regions seeing elevated valuations as capital repositions toward beneficiaries of sustained high crude prices. Kazakhstan and Russia have both accelerated production in response to the vacuum left by the Gulf disruption, and non-OPEC producers broadly are expected to account for the entirety of the 1.1 million barrel per day global supply increase projected for 2026 on average, according to the IEA.

From a demand perspective, the global picture remains complex. The IEA revised its 2026 oil consumption growth estimate down by 210,000 barrels per day from last month, now projecting a year-on-year increase of 640,000 barrels per day. The downward revision reflects the expected drag on economic activity from sustained high energy costs, rising inflation expectations, and the uncertainty that geopolitical instability introduces into capital spending and consumer confidence. At the same time, Asian importers, particularly in China and India, have been moving aggressively to secure long-haul supply from alternative producers, providing a floor under demand volumes even as prices remain elevated.

For retail consumers, the impact is already tangible. U.S. pump prices are currently tracking between 4.10 and 4.30 dollars per gallon nationally, and further increases are likely if Brent sustains above 110 dollars through April. That price level represents a significant headwind for discretionary spending and adds a new layer of complexity to the Federal Reserve's inflation management calculus at a time when the central bank had been tentatively signaling openness to rate adjustments.

Looking ahead, market participants and energy analysts broadly agree that the trajectory of oil prices over the next two to three weeks will be almost entirely determined by the pace of developments in the Strait of Hormuz. If the waterway remains effectively closed, the structural shortage will continue to deepen as strategic reserves are drawn down and alternative supply routes reach their physical limits. Goldman Sachs and several other major banks have flagged a meaningful probability that Brent could test the upper range of historical precedent under that scenario. On the other hand, any credible progress toward a ceasefire, even a temporary one, would likely trigger a sharp reversal, as the market has built a substantial geopolitical risk premium into current prices. The present environment rewards careful attention to diplomatic signals above all other variables, and any headline indicating movement in talks between Washington and Tehran will almost certainly move crude by several dollars in either direction within minutes of publication.

For the moment, the uptrend remains intact, the geopolitical premium is firmly embedded in prices, and the path of least resistance for crude oil remains higher as long as the Strait of Hormuz stays choked and negotiations remain unresolved.