Global oil markets were sent into turmoil this week as crude prices surged past the US$100 mark for the first time in four years, prompting the G7 nations to call an emergency meeting on Monday to address the escalating crisis.
With conflicts continuing across the Middle East and production shut-ins mounting, analysts warn the world could be entering a new era of sustained high prices.
Brent crude briefly spiked to $116.50 a barrel at market open before retreating to $104.50 following reports that the G7 would release emergency barrels from strategic reserves.
Even so, the rally marks an almost 45 per cent increase since the outbreak of the conflict earlier this month, fundamentally reshaping expectations for 2026 oil prices.
For Rystad Energy, the turmoil has forced a complete reassessment of its base case.
The consultancy had previously forecast an average Brent price of $60 per barrel this year, under a pre-crisis assumption of a 2.6 million barrels per day surplus. Now, however, two new war-driven scenarios have replaced that view.
According to Rystad’s Vice President of Oil Markets, Janiv Shah, “Brent oil prices could reach $135 per barrel if the current situation persists for four months.
“The forward-looking analysis we’ve done on a two-month basis is also showing prices stay above US$110 per barrel, given the current conditions.
“The market is currently grappling with physical supply being choked off by drone strikes, while Middle Eastern producers are simultaneously hitting a critical point where they must shut in production simply because there is nowhere left to put the oil.
“Russian supply remains the ultimate wildcard in this equation; as prices climb, the incentive to reroute that crude through alternative channels like India becomes impossible for the West to ignore, as evidenced by the recent 30-day US waiver.
“However, these are temporary bandages on a deep wound.
“Between the potential for massive Strategic Petroleum Reserve (SPR) releases and the eventual response from US shale, the world is searching for a stabiliser to absorb this shock.
“With refineries already curtailing throughput as a defensive measure, the focus has shifted entirely from profit margins to national energy security, making current oil prices a very tangible threat to global stability.”
Reports indicate that Saudi Arabia became the latest nation to shut in production as of Monday, 9 March.
The disruption has heightened attention on the status of the Strait of Hormuz, through which roughly a fifth of the world’s oil supply flows.
Rystad Energy currently considers two plausible pathways.
Firstly, in the two-month war scenario, the conflict concludes by late March, allowing the Strait to reopen gradually.
Brent prices would remain above US$110 in April before stabilising near US$70 by December, resulting in a 2026 average of about US$87 per barrel.
Secondly, in the four-month war scenario, the strife drags into May, pushing oil to peak around $135 before easing toward US$85 by year-end, averaging roughly US$100 per barrel for 2026.
Although the energy market remains volatile, with “high uncertainty surrounding both the duration and the geopolitical trajectory of the crisis”, Rystad cautions that more extreme outcomes cannot yet be ruled out.
As Shah emphasised, the world’s quest for energy stability has rarely felt more urgent — or more fragile.
