Since March 2026, the Iran conflict has led to the actual closure of the Strait of Hormuz, which has become the most serious supply shock event in the global energy market. The strait is responsible for about 20% of the world's oil and liquefied natural gas transportation. The conflict has disrupted about 20 million barrels of oil supply per day, equivalent to one-fifth of global oil consumption. The incident quickly evolved into a full-scale energy crisis. Crude oil prices soared by more than 40% in the past month. The pressure on the refined products market was particularly acute. The tight supply of diesel, jet fuel and petrochemical products has spread to Asia, Europe and the global industrial chain. The International Energy Agency (IEA) announced on March 11 the release of 400 million barrels of strategic petroleum reserves, of which the United States contributed 172 million barrels. This is the largest collective action in the history of the IEA aimed at mitigating short-term shocks. However, market analysis shows that this crisis is different from previous supply disturbances, and its duration and depth may reshape the global energy landscape, inflation expectations and asset pricing logic.

Crude oil and refined product price trends: current data and futures curve signals

As of March 25, 2026, the price of Brent crude oil hovered in the range of 99.26-99.79 US dollars per barrel, which has increased significantly compared with before the conflict. It has increased by more than 40% in the past month and has increased by approximately 36% year-on-year. WTI crude oil prices fluctuate between 88-99 US dollars per barrel. While spot prices have yet to break through their historical peaks, inflation-adjusted real levels are close to highs. Goldman Sachs raised its forecast for the average price of Brent crude oil to US$85/barrel in 2026, and predicted that it may maintain the level of US$110/barrel from March to April. The futures curve shows forward prices have moved significantly higher six months out, with the market pricing in a longer-term tight balance caused by delays in infrastructure repairs. The market for refined products is under pressure far beyond crude oil itself, with diesel and jet fuel crack spreads widening, gas stations queuing up to buy gas cans in Asian markets, and the European airline industry already starting to cut flights in response to soaring fuel costs.

Refined product market pressure: structural mismatch between Europe and Asia

Europe's refining capacity has shrunk significantly in the past 20 years and has instead relied on the supply of diesel, jet fuel and petrochemical intermediates from the Middle East, while Middle East crude oil exports have mainly shifted to Asia. The conflict has led to a sharp decline in distillate exports from Middle East refineries, with Asia bearing the brunt. Europe is facing a double dilemma: increased dependence on the Middle East after the embargo on Russian products, coupled with insufficient refinery capacity. The U.S. gasoline-dominated refinery structure contrasts sharply with the Middle East's diesel orientation, further exacerbating global product mismatch. The latest data shows that Asian importers are willing to pay higher premiums, leading to a significant increase in tanker freight rates and the risk of supply diversion in Europe and North America. Even if freight rates from North America to Asia rise sharply, the price difference is still enough to entice tankers to reroute.

Geopolitical Risk Assessment: Ceasefire Expectations and Infrastructure Damage

The closure of the Strait of Hormuz is not a complete physical blockade, but Iran's effective control through military threats and selective interception. Early in the conflict, U.S.-Israeli strikes triggered a retaliatory attack by Iran on Qatar’s LNG facilities, further disrupting natural gas flows. The Trump administration had issued a 48-hour ultimatum requiring Iran to reopen the strait or threaten to attack infrastructure, but subsequent dialogue showed that both sides may seek a de-escalation path. The market's lack of explosive gains in the short term is partly due to expectations of peace talks. However, if the closure of the strait lasts for several months, the global economy will face the worst energy shortage since the oil embargo of the 1970s. Analysts believe that this incident exposed the fragility of the global energy supply chain: the 20% supply interruption is far more than any previous single event. Forward curve pricing shows that infrastructure repair will take at least 6 months, and long-term oil prices may stabilize above US$100/barrel.

Analysis of supply and demand dynamics: inventory buffer and demand destruction mechanism

Daily oil market fluctuations usually only involve hundreds of thousands to millions of barrels per day, but this time the daily gap is close to 10 million barrels, an unprecedented scale. Fortunately, high pre-conflict inventories (over 1.3 billion barrels of floating stocks at sea) and the release of IEA strategic reserves have alleviated immediate pressure, but as inventories are depleted, price pressures will be gradually transmitted. Signs of damage are already starting to show on the demand side: There are fewer cars on European roads over the weekend, airlines are cutting flights and high oil prices are dampening industrial activity and consumption. Demand destruction will become the natural balancing mechanism for supply shocks, similar to the natural gas demand reduction achieved by "turning off the lights and cooling down" during the Russia-Ukraine conflict in 2022. But this time the scale is larger, and global economic growth faces downward risks, especially in Asia, which is the engine of growth. Its strong energy demand will drive the flow of oil and gas to high-priced areas.

European natural gas winter outlook: low inventory and replenishment dilemma

At the beginning of 2026, EU natural gas inventories are only about 29%-30% full, which is far lower than the same period in previous years. Before the conflict, European natural gas prices were already under pressure due to low inventories. After the conflict, the price of the Dutch TTF benchmark contract almost doubled and currently remains high. The summer replenishment window should have been realized through low-price arbitrage, but the current futures curve is inverted and the cost of replenishment is higher than the expected selling price in winter, causing storage operators to face the risk of losses. Although U.S. liquefied natural gas exports have increased, it will take several months to enter production. Qatar's production capacity will be reduced by 3-5 years due to the conflict. Analysis points out that if Europe cannot find a stable alternative source before October-November, the 2022-style energy crisis will repeat itself next winter: electricity prices soar, industries are forced to limit production, and residents' heating costs rise.

European Energy Alternatives: The Return of Nuclear Energy and the Limits of Renewable Energy

The return of nuclear power as a baseload power source has become a consensus, and its stable output can alleviate the intermittency problem of renewable energy, especially in the context of continued growth in demand for data centers, electric vehicle charging and air conditioning. Although renewable energy is a long-term focus, it cannot fill the gap in the short term, and the coexistence of nuclear energy and fossil fuels will become a transitional reality. European electricity prices will be transmitted to household contracts as natural gas costs rise. Although electric vehicle owners avoid fuel costs in the short term, rising electricity prices in winter will offset some of the advantages.

Global oil and gas flow direction shifts: Asia’s high prices dominate marginal demand

As the traditional main destination for Middle East crude oil, Asia has now become the highest bidder. Although stocks in Japan, South Korea and China have buffers, energy demand driven by economic growth makes them willing to pay a much higher premium than Europe. The spread between WTI and Brent has widened, and prices in East Suez are higher, indicating that Asian marginal buyers dominate the market. As wealthy markets, Europe and North America can afford higher prices, but declining competitiveness will accelerate manufacturing outflows. In the long term, the crisis may accelerate the energy transition, but in the short term renewable energy cannot fill the gap.

Macroeconomic Impact: Stagflation Risk and Central Bank Policy Dilemma

Energy shocks are driving up inflation expectations and threatening economic growth. In the past four weeks, the U.S. market has shifted from expecting three interest rate cuts this year to almost zero risk of interest rate cuts or even interest rate hikes. The yield on 2-year Treasury bonds has exceeded the federal funds rate, signaling a strong signal from the bond market. The supply shock is different from the demand stimulation after the epidemic in 2020, which pushed up demand and triggered inflation through fiscal expansion; the current supply shock directly raises production costs, but demand shrinks due to high prices, forming a typical stagflation environment. Central banks face a dilemma: giving priority to fighting inflation will suppress growth, while giving priority to stabilizing growth may condone inflation. Although the new governor of the Federal Reserve is leaning towards easing, consensus within the FOMC is difficult to achieve. The reaction of the bond market will be key. If long-term yields continue to rise, the steepening of the curve will further inhibit economic growth. Europe has seen its largest long liquidation of euro futures positions, with currency markets reflecting investor concerns about the euro zone's affordability.

Precious metal market revaluation: callback and long-term support under liquidity shock

Gold and silver, as traditional safe-haven assets, experienced a correction of more than 10% in the early stages of the conflict. As of March 25, 2026, the price of gold hovered in the range of 4398-4539 US dollars per ounce, briefly touching above 5000 US dollars and then falling back. This trend is not caused by a deterioration in fundamentals, but by a liquidity shock: investors need to quickly liquidate their gold ETF and mining positions in response to fluctuations in the stock and bond markets. Gold has seen huge inflows into investment portfolios over the past two years, making it one of the most liquid hard assets, but the success has also led to crowded trades. Silver prices were dragged down by their industrial attributes and performed even weaker, pulling back simultaneously with copper prices. Although green demand such as solar energy provided support, global economic growth was expected to slow down. Ole Hansen, head of commodity strategy at Saxo Bank, pointed out that gold's current correction is similar to the early days of the financial crisis in 2008, where liquidity demand dominated, but macro drivers - unsustainable fiscal debt, geopolitical risks, de-dollarization - have not disappeared. In the long term, gold still has the foundation to move towards US$6,000 per ounce. Although it will be difficult to achieve in 2026, it is expected to gradually recover after stabilization. As a precious metal and an industrial metal, silver will recover under tight supply balance, but short-term investment demand will be more volatile.

Federal Reserve Policy Space and Bond Market Pressure

Against the backdrop of high fiscal debt, the rise in long-term yields is approaching a critical point. If quantitative easing or yield curve control is implemented, it may trigger further selling in the bond market and form a vicious cycle. On the contrary, maintaining austerity will exacerbate stagflationary pressures. Analysts believe that the central bank may eventually give priority to supporting economic growth, but it must be based on the stability of the bond market.

Signal of the bottom of the crisis: ceasefire agreement and restoration of energy flows

When the crisis bottoms out depends on geopolitical easing. The ceasefire agreement may become a turning point, but it requires subsequent US fiscal policy responses and the restoration of energy flows. In the short term, demand destruction and the release of strategic reserves will provide a buffer, and oil prices may fluctuate around $100/barrel. In the medium to long term, infrastructure repair, alternative supply development and the acceleration of the energy transition will be key variables. Investors should pay attention to technical support levels, such as gold's 200-day moving average, which still provides important support. Once the decline stops and stabilizes, safe-haven demand is expected to return.

Investment inspiration and long-term outlook

This energy crisis is not only a supply incident, but also a test of the resilience of the global economy. It highlights the dominant role of geopolitical risks in commodity pricing and reminds markets that hard assets may come under temporary pressure in a liquidity crisis, but long-term structural support remains strong. Policymakers need to accelerate supply diversification, improve reserve efficiency and promote the development of baseload power sources such as nuclear energy to reduce future vulnerability. Global economic growth will seek balance in a high energy cost environment. Although the risk of stagflation is high, adaptive adjustments will eventually bring about a new equilibrium. In the coming months, the market will closely monitor developments in the Strait of Hormuz, the speed of inventory depletion and central bank communications. Any positive signals may trigger asset repricing.