When the U.S. and Israel first launched attacks on Iran in February, many expected a severe shock to global energy markets. Some forecasters projected oil prices would soar to $150–$200 per barrel, and the IEA described the crisis as the largest in energy market history. While oil soared to over $110 at the beginning of the war, it was sustainably below the July 2008 peak of $147 (inflation adjusted $211).

In short, any turmoil in the Middle East is expected cause volatility in oil, but analysts were especially concerned that the closing of the Strait of Hormuz would have significant impacts. Around 20% of the world’s global supply flow through the Strait and it is the primary export for oil produced by Saudi Arabia, the UAE, Kuwait, Qatar, Iraq, Bahrain and Iran.

However, a global surplus of oil inventory has helped mitigate the impact of the reduced supply. More notably, China—the world’s largest crude oil importer—reduced its crude oil imports by 40% between February and May, driven in part by large stockpiles (some also mention the country’s accelerating shift toward electric vehicles).The unexpected decline in demand has provided a buffer against reduced supply.

Total global observed oil inventories, January 2021-May 2026

Other impactful influences on the price are optimism around a ceasefire and consumers scaling back their energy use during the conflict.

It is  unclear when  China will begin to reduce reliance on stockpiles and begin to purchase again on the open market. After the war is over, will Middle Eastern oil demand return to pre-war levels or will supply chain and lifestyle changes (including the move to EVs) be permeant?