Oil prices experienced a notable increase of more than one dollar per barrel on Thursday, 26 March 2026, recovering from losses incurred in the previous trading session. This upward movement was driven by escalating concerns that sustained military conflict in the Middle East which could lead to further disruptions in global energy supplies. Consequentially, Brent futures had risen by USD 1.65 (1.61%), to reach USD 103.87 per barrel, while West Texas Intermediate crude futures advanced by USD 1.49 (1.65%), to USD 91.81 per barrel. This rebound followed a decline of more than two percent for both benchmarks on Wednesday.
The persistent geopolitical tensions in the region remain a central focus for the market. Iran’s foreign minister Abbas Araghchi stated on Wednesday that while the country continues to review a United States proposal aimed at ending the war, it has no intention of engaging in negotiations to resolve the broader Middle East conflict. Concurrently, the White House has signaled a heightened stance, with the press secretary asserting that President Donald Trump would intensify pressure on Iran should Tehran fail to acknowledge what the administration terms a “military defeat.”
According to a senior economist at the NLI Research Institute, optimism regarding a potential ceasefire has decreased, with the conditions set by Washington appearing particularly strict. This situation leaves oil prices susceptible to further volatility, that is pegged upon the trajectory of diplomatic negotiations and the military actions undertaken by both parties.
Oil Importers Seek Strategic Reserves amid Supply Fears
Details of the United States’ diplomatic approach have emerged, revealing a comprehensive proposal transmitted through Pakistani intermediaries. According to three Israeli cabinet sources familiar with the plan, the fifteen-point proposal includes demands for the removal of Iran’s stockpiles of highly enriched uranium, a cessation of enrichment activities, constraints on its ballistic missile program, and an end to financial support for regional allies.
The ongoing conflict has already had a tangible impact on global energy logistics, effectively halting the majority of shipments through the Strait of Hormuz. The International Energy Agency has characterized this disruption as the most significant in history.
In response to these mounting supply risks, Japanese Prime Minister Sanae Takaichi has formally requested an additional coordinated release of oil stockpiles from International Energy Agency Chief Fatih Birol. This request, made during discussions on Wednesday, underscores Tokyo’s efforts to hedge against the potential consequences of a protracted conflict in the Middle East.
Compounding global supply concerns, indicate that at least 40 percent of Russia’s oil export capacity remains offline due to a combination of Ukrainian drone attacks, a disputed strike on a major pipeline, and the seizure of tankers. Furthermore, Iraqi oil production has experienced a significant decline, with three Iraqi energy officials reporting on Wednesday that storage tanks have reached critically high levels.
Amid these supply-side constraints, downstream effects are becoming increasingly evident. In Somalia’s capital, Mogadishu, acute fuel shortages and surging petrol prices are forcing numerous tuk-tuk drivers to cease operations.
These global supply disruptions stand in contrast to the situation in the United States, where domestic crude inventories rose by 6.9 million barrels to 456.2 million barrels in the week ending March 20, 2026. This figure represents the highest inventory level since June 2024 and substantially exceeded analysts’ expectations, which had forecast a build of just 477,000 barrels.
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