Big Oil Rides the Iran War Crude Surge as Hormuz Risk Splits the Majors
The Iran war's crude spike lifted producer revenues into the second quarter, even as a looming supply glut and Hormuz exposure spared some majors the full windfall.
ICE Brent crude front-month fell 5% to $105.61 a barrel by 11:41 a.m. ET on Wednesday (2026-05-20) after U.S. President Donald Trump again asserted the Iran war would end "very quickly," though investors stayed wary about the outcome of peace talks.2 That followed a 1% drop the prior session on Tuesday (2026-05-19), after Trump said he had paused a planned attack to allow negotiations.4
Even after the pullback, crude sat far above where it started the war. Prices had surged more than 55% since the conflict began, with ICE Brent crude front-month jumping from around $72 a barrel on February 27 to nearly $120 at its peak as fears mounted over supply through the Strait of Hormuz.3 ICE Brent crude front-month rose 51% in March alone, one of the largest one-month surges on record.3
For producers, that arithmetic feeds straight into revenue and margins across the second quarter. The scale of the supply loss, already more than 1 billion barrels, means oil prices are likely to remain above $80 a barrel for the rest of the year, Eurasia Group said in a client note.1
Analysts split on how far the disruption runs. Citi said on Tuesday (2026-05-19) it expected ICE Brent crude front-month to reach $120 a barrel in the near term, arguing markets were underpricing the risk of prolonged supply disruption, while Wood Mackenzie estimated crude could approach $200 if the strait stayed closed.2 PVM analysts said global oil stocks could reach critically low levels.2
The physical picture stayed thin. Three supertankers crossed the Strait of Hormuz on Wednesday (2026-05-20) carrying 6 million barrels of Middle East crude toward Asian buyers, after waiting in the Gulf for more than two months.2 About a fifth of global oil and liquefied natural gas normally flows through the waterway.1
Not every major gains equally. ExxonMobil pumped the equivalent of 4.6 million barrels per day in the first quarter, down from 5 million the prior quarter, with around a fifth of its oil-and-gas production located in the Middle East, one of the highest exposures among the majors.8 A looming supply glut is weighing on giants from ExxonMobil to Shell.6
The demand side is tightening in the United States. U.S. crude stockpiles reported by the Energy Information Administration were expected to have fallen by about 3.4 million barrels, a Reuters poll showed.2 Three weeks before that reading, Trump had noted "massive numbers" of empty oil tankers heading to the U.S. to load crude and products, and that fleet has since begun carrying barrels.5
The gas leg carries its own risk. Goldman Sachs said outages to Qatari LNG exports could persist longer than previously assumed, pushing its second-quarter 2026 forecast for Europe's TTF gas benchmark to about $22 per MMBtu.7 Goldman also warned oil markets could reach "demand destruction" territory if the Hormuz disruption continued.7
The ceasefire remains the swing factor. Oil rose more than 3% on Tuesday (2026-05-19) as hopes for a lasting truce faded, dimming prospects of reopening the strait.1 Trump headed to China for a high-stakes summit, adding a diplomatic variable to an already volatile setup.1
The near-term tell is whether those three tankers become a convoy or stay a trickle through Hormuz.2 If the closure holds through the summer, inventories keep drawing and the majors book their strongest quarter in years; if a durable ceasefire lands, the unwind could be sharp.2