Oil prices near $120 in 2026 as Iran war stalls talks

Oil prices extended their rally as the conflict involving Iran and the United States and Israel dragged on with no clear diplomatic breakthrough. Markets focused on the risk that key supply routes from West Asia will stay constrained for longer, especially the Strait of Hormuz, a critical chokepoint for global crude shipments.

Brent crude futures for June rose to $119.94 a barrel in early Thursday trading, keeping prices close to the $120 level last seen during major disruptions in 2022. US benchmark West Texas Intermediate (WTI) also stayed elevated above $100, reflecting tightness across major benchmarks. The price action has been amplified by sharp day-to-day swings and sustained gains across multiple sessions.

What moved prices this week

Brent crude futures for June rose $1.91, or 1.62%, to $119.94 a barrel as of 0057 GMT, after gaining 6.1% in the previous session. The June contract had increased for a ninth day and was set to expire on Thursday, with the more active July Brent contract at $111.38, up 94 cents, or 0.85%, after a 5.8% rise in the prior session.

WTI futures for June were up 63 cents, or 0.59%, at $107.51 a barrel, after climbing 7% in the previous session. The repeated gains across eight of nine sessions highlighted how markets were repricing supply risk rather than reacting to a single headline. Separate reports also described intraday spikes near $120 for both Brent and WTI during the intensifying phase of the war, before prices eased back.

Deadlocked talks and a longer disruption risk

A key trigger for the latest leg higher was the view that any near-term resolution remains unlikely. IG market analyst Tony Sycamore said prospects for an early end to the conflict or a reopening of the Strait of Hormuz “remain dim.”

The broader backdrop in the reports is a war-driven supply shock rather than a generalised panic across all classic crisis assets. Even so, the combination of restricted shipping, production disruptions, and policy uncertainty is keeping traders focused on physical availability and near-term delivery.

Trump’s outreach to oil companies and blockade concerns

A White House official said US President Donald Trump spoke with oil companies on Wednesday about how to mitigate the impact of a possible months-long US blockade of Iran’s ports. The discussion added to concerns that disruptions could be extended rather than temporary.

The market reaction reflects a supply-chain issue: even if producing capacity exists elsewhere, bottlenecks in shipping and the threat environment around major routes can still keep barrels from reaching buyers.

Strait of Hormuz disruption and the shipping squeeze

Tehran has largely blocked all shipping apart from its own from the Gulf through the Strait of Hormuz since the US and Israel began air strikes on Iran on February 28, according to the reports. This month, the US began blockading Iranian ships.

Independent research firm Rystad Energy estimated roughly 15 million barrels of crude oil, about 20% of the world’s oil, typically move each day through the Strait of Hormuz. Another report described the waterway as carrying roughly a fifth of the world’s oil supply and as much as about 60% of India’s total oil supply. With threats of missile and drone attacks, tankers have largely stopped transiting the strait, tightening supply beyond Iran itself.

OPEC+ output plan and the UAE’s exit

On the supply side, OPEC+ is likely to agree a small increase of around 188,000 barrels per day in oil output quotas at a meeting on Sunday, sources told Reuters. The planned rise, however, is small relative to the scale of disruption being discussed in the same set of reports.

The meeting also comes after the United Arab Emirates’ withdrawal from OPEC, effective May 1. The exit is expected to weaken OPEC’s ability to control prices. While the UAE could theoretically raise production after exports restart, analysts cited in the reports said this is unlikely to change market fundamentals this year given the Hormuz closure and other war-related disruptions. Wood Mackenzie said Gulf countries, including the UAE, will take months to return to pre-war production volumes.

How analysts are framing the oil shock

Some reports described the episode as an unusually direct oil-supply shock, with prices being driven by the ability to move barrels rather than longer-term demand narratives. Another report said Brent’s move above $100 raised the risk of inflation reaccelerating just as some economies had started stabilising after the 2022 price surge.

Goldman Sachs raised its fourth-quarter forecasts to $10 per barrel for Brent and $13 for WTI, citing “net upside risks to oil prices” and the “unprecedented scale of the shock,” according to a Reuters-reported note dated April 26.

Why it matters for India: inflation, growth and import dependence

India imports nearly 90% of its oil, making it particularly sensitive to sustained price increases. A report citing Reserve Bank of India estimates said every 10% rise in crude adds about 30 basis points to inflation and cuts 15 basis points from growth, if the increase is passed on to consumers.

With Brent described as up roughly 70% since the start of the year in one report, the risk is that elevated crude keeps pressure on household budgets and raises input costs across transport and manufacturing. The same coverage warned that if flows through the Strait of Hormuz remain badly disrupted for another two months, some analysts see Brent rising above $120, a level historically associated with demand destruction in price-sensitive economies.

Market impact: volatility across assets and regions

The oil spike also fed into broader risk sentiment. One report noted Tokyo’s Nikkei 225 index shed 5.2% on a day when oil surged sharply, highlighting how energy price shocks can coincide with equity market stress.

Another report said prices moderated at one point after the Financial Times reported that some G7 members were considering releases of strategic oil reserves, though the report was described as unconfirmed. Trump, separately, downplayed the need to tap the US Strategic Petroleum Reserve, saying US supplies were ample and prices would fall.

Key facts and levels to track

What to watch next

The near-term focus is on whether shipping conditions through the Strait of Hormuz improve and whether diplomatic talks restart in a way that reduces the risk premium. Traders will also watch Sunday’s OPEC+ decision for confirmation of quota changes.

For India and other large importers, the key variable remains how long crude stays above $100 and whether benchmark prices revisit the $120 area on sustained basis. With multiple reports pointing to continued disruptions and slow recovery in Gulf production and logistics, crude pricing is likely to stay closely tied to developments around ports, shipping routes, and regional security conditions.

Conclusion

Oil prices are holding near multi-year highs as the Iran conflict, shipping restrictions through the Strait of Hormuz, and policy actions such as potential port blockades constrain supply. Brent’s move toward $120 has sharpened inflation risks for import-dependent economies like India, where RBI-linked estimates suggest higher crude can quickly feed into inflation and growth. The next signposts are OPEC+’s quota decision, the UAE’s formal exit from OPEC on May 1, and any verified change in shipping access through the Strait of Hormuz.