Crude oil is heading for its largest quarterly price decline in about six years, as the historic supply crunch triggered by conflict in the Middle East unwinds and shipping through a critical chokepoint gradually returns to normal. The reversal caps a dramatic round trip for a market that had spiked to multi-year highs earlier in 2026 before retreating sharply.
The scale of the second-quarter drop stands out. After the outbreak of conflict and the near-total disruption of tanker traffic through the Strait of Hormuz sent prices soaring in the early part of the year, oil has fallen steeply over the past three months as those fears faded, putting the market on course for its steepest quarterly fall since the pandemic-era collapse of 2020. By the end of June, the international Brent benchmark was trading in the low-to-mid $70s a barrel and the US West Texas Intermediate benchmark near $70, both hovering around four-month lows, well below the peaks above $110 reached at the height of the supply scare.
Two forces did much of the work in easing the squeeze. Workarounds that allowed crude to bypass the Hormuz chokepoint helped restore flows, and a notable drop in crude imports into China softened the blow from the loss of Persian Gulf barrels, taking pressure off a market that had been bracing for a prolonged shortage. As vessel traffic recovered, reports described previously stranded supertankers departing the Gulf loaded with crude and an increasing number of liquefied natural gas carriers resuming transits through the channel.
The diplomatic backdrop reinforced the move. Progress toward a ceasefire and a framework agreement between the United States and Iran reduced the risk premium embedded in prices, encouraging traders to unwind bets on a sustained interruption. The shift was rapid enough that oil strung together consecutive sessions of losses into late June, extending a slide that had already made for one of the weakest stretches the market has seen in years.
The earlier spike had been severe. The disruption ranked among the largest in the history of the oil market, with Middle Eastern output slashed by millions of barrels a day, global inventories drawn down sharply and stockpiles in developed economies falling to their lowest levels in more than two decades. Emergency reserve releases and modest production gains elsewhere, led by US output, only partly offset the shortfall, which is why prices climbed so steeply before the relief arrived.
Despite the retreat, analysts and forecasters cautioned that the market is not fully out of the woods. Inventories remain depleted, infrastructure damage across the Gulf will take time to repair, and security concerns around shipping linger, all of which could keep a floor under prices or spark renewed volatility if tensions flare again. Official forecasters have noted that any full restoration of production, inventories and trade flows to pre-conflict levels must account for the partial restructuring of the global oil market that has already taken place.
For now, the dominant theme is normalization. The combination of returning supply, softer demand from the world's largest importers and a calmer geopolitical picture has pulled prices back toward where they sat before the crisis, handing relief to consumers and fuel-intensive industries while leaving the durability of the decline dependent on how firmly the fragile regional calm holds.