Oil Prices expected to remain elevated in 2026 even if war ends, analysts warn

GREAT BAY--Global oil prices are expected to remain elevated for much of the year, even if the war involving Iran ends quickly, as supply disruptions, depleted inventories, damaged confidence in shipping routes and a slow recovery of Middle East production continue to place pressure on the energy market.

Recent market reports show that Brent crude has been trading near or above the US$100 per barrel mark amid renewed fears over shipping through the Strait of Hormuz, one of the world’s most important energy corridors. Reuters reported this week that Brent crude rose to about US$100.10 per barrel after new U.S. strikes in Iran renewed concerns over oil and LNG flows through the Strait.

The practical message for small island economies is clear: even if the war ends, fuel prices may not fall quickly. The global energy system has already absorbed a major shock, and the recovery is expected to be gradual. For import-dependent islands such as St. Maarten, this means continued exposure to higher fuel, transport, electricity and shipping costs.

The IEA has described the conflict’s impact on energy markets as an unprecedented disruption that is tightening global fuel supply and placing pressure on consumers and economies. Many governments have already adopted measures to conserve energy, support consumers or increase alternative supply in response to the crisis.

For St. Maarten, where electricity generation, transportation, food imports and business operations are all closely linked to fuel costs, the persistence of elevated oil prices could have wider consequences. Higher crude prices can feed into the cost of gasoline, diesel, electricity production, freight, airline operations and imported goods, especially if global shipping and refining markets remain strained.

The latest forecasts do not all agree that oil will remain at exactly US$100 per barrel for the rest of the year. However, verified reports from the EIA, IEA and market analysts all point in the same direction: oil prices are expected to remain under pressure, the market will not normalize immediately, and any peace agreement or ceasefire would still be followed by a slow and uncertain recovery.

Energy observers say this reinforces the need for small island economies to monitor fuel costs closely, strengthen energy planning and consider relief or mitigation measures where necessary, particularly for households and businesses already facing high living and operating costs.

The U.S. Energy Information Administration has also warned that oil shipments through the Strait of Hormuz are not expected to return to pre-conflict levels until later this year. The EIA said some Middle East oil production is likely to remain disrupted over that period, leading to large inventory draws and limiting downward pressure on prices even after shipping flows improve. The agency forecasts Brent crude around US$106 per barrel in May and June, before easing to an average of US$89 per barrel in the fourth quarter of 2026.

The International Energy Agency has similarly warned that the market remains tight. In its May Oil Market Report, the IEA said global supply losses since February reached 12.8 million barrels per day by April, with output from Gulf countries affected by the Strait of Hormuz disruption standing 14.4 million barrels per day below pre-war levels. The IEA said that even if flows through the Strait gradually resume, supply is likely to recover more slowly than demand, keeping the oil market in deficit until the final quarter of the year.

Energy analysts say this is why an end to active fighting would not automatically bring oil prices back down. Ships may not immediately return to normal routes, insurance and freight costs may remain high, damaged or shut-in production takes time to restore, and global inventories have already been drawn down sharply. The IEA said observed global inventories, including oil on water, were drawn down by 250 million barrels over March and April, or about 4 million barrels per day.

The Strait of Hormuz remains the central concern. According to the IEA, around 25% of the world’s seaborne oil trade passed through the Strait in 2025, while alternative routes are limited. The agency also noted that more than 110 billion cubic meters of LNG moved through the Strait in 2025, with no alternative route available for those volumes.

Private-sector forecasts also point to continued pressure. A Reuters poll of 32 economists and analysts found that forecasters raised their 2026 Brent outlook for the second consecutive month after the Iran war began, projecting Brent crude to average US$86.38 per barrel for the year. While that average is below US$100, it reflects a major upward revision from earlier expectations and confirms that analysts are building prolonged disruption into their outlooks.

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