Brent Back at Pre-War Levels as Oil Posts Biggest Quarterly Drop Since 2020
ICE Brent crude front-month settled at $72.12 on Friday (2026-07-04), unwinding nearly all the war premium built during the US-Iran conflict that began in late February.
ICE Brent crude front-month was priced at $72.12 per barrel as of Friday's close (2026-07-04), almost exactly where it traded on 27 February before the outbreak of the US-Iran war — a round trip that makes Q2 2026 the largest quarterly percentage decline in oil prices since the pandemic collapse of Q2 2020.3
From peak to trough the move was stark. ICE Brent crude front-month surged more than 55 percent after the war broke out, reaching levels more than half above its pre-war price as markets priced a sustained Strait of Hormuz closure — through which roughly a fifth of global oil and LNG normally flows.3 Brent crude jumped 51 percent in March alone, one of the largest one-month oil price surges on record.3 The reversal of that premium over the subsequent weeks is what the quarterly data will record when books close.
The turning point came on Wednesday (2026-05-20), when US President Donald Trump announced a two-week ceasefire between Washington and Tehran. ICE Brent crude front-month fell roughly 5 percent that same session, with NYMEX WTI crude front-month tracking the move lower.2 Three supertankers carrying approximately 6 million barrels of Middle East crude that had been waiting in the Gulf for more than two months cleared the Strait that day, the first significant physical flow signal since the conflict began.2
The scale of the subsequent retreat has exceeded most institutional forecasts. Eurasia Group, writing in a client note in mid-May, said supply losses already exceeding one billion barrels meant oil prices were "likely to remain above $80 per barrel for the rest of the year."1 Citi, as of late May, expected ICE Brent crude front-month to rise sharply in the near term and argued markets were underpricing the risk of prolonged supply disruption.2 NYMEX WTI crude front-month settled at $68.78 as of Friday (2026-07-04), well below both thresholds.1
Downstream markets are telling a similar story. European spot premiums for jet fuel, which spiked sharply during the Hormuz closure, have fallen to $99 per metric tonne over ICE gasoil futures — the lowest level since the conflict began, according to Argus data.4 The premium compression suggests physical traders are no longer pricing acute near-term disruption, even as the full restoration of Middle East export logistics takes time.4
The unwinding is not without ambiguity at the physical level. As recently as Wednesday (2026-05-20), US crude inventories were drawing at the quickest pace in nearly 40 years, with surging domestic fuel demand running well ahead of stagnant production growth, OilPrice.com reported.5 A Reuters poll at the time estimated weekly crude stocks had fallen around 3.4 million barrels.2 Whether those draws have continued into June — or whether the price signal itself has shifted the production response — will become clearer when EIA publishes its next inventory report.5
The Economist noted in mid-May that a looming supply glut was already weighing on the major oil companies, complicating capital allocation even before the war premium unwound.6 NYMEX WTI crude front-month at $68.78 on Friday (2026-07-04) sits in a range that tests producer economics for projects sanctioned on higher price assumptions.6
OPEC+ production signaling will be the next secondary variable to watch. The quarterly price decline has not yet prompted a formal response from the group, and the scale of the reversal is precisely the kind of overshoot that has historically triggered production quota discussions.1 Any indication that OPEC+ is preparing a supply response could place a floor under the market in the near term, while confirmation that current output levels will be maintained would test the $65-70 range that prevailed before the February war premium began to build.1
The jet fuel premium remains the cleaner real-time signal. At $99 per metric tonne over ICE gasoil, it is compressing fast. If it reaches the pre-conflict range in coming sessions, it will confirm that physical supply chains have largely normalised — and remove one of the last arguments for a material war-premium rebuild.4