Oil Market Report - April 2026

April 2026 on the crude market became a month of a transition from outright war-related panic to a regime of partial normalization. Both Brent and WTI began the month still trading the extreme March supply shock, rallied sharply when U.S. rhetoric suggested a longer campaign against Iran, collapsed after the April 8 ceasefire announcement, and then rebuilt a substantial premium as physical flows through the Gulf failed to normalize cleanly.

EXECUTIVE SUMMARY

April 2026 on the crude market became a month of a transition from outright war-related panic to a regime of partial normalization. Both Brent and WTI began the month still trading the extreme March supply shock, rallied sharply when U.S. rhetoric suggested a longer campaign against Iran, collapsed after the April 8 ceasefire announcement, and then rebuilt a substantial premium as physical flows through the Gulf failed to normalize cleanly. Albeit crude futures partially unwound the March panic, the structural disruption premium stayed intact. Through April 29, Brent was only modestly higher month-to-date, while WTI was slightly lower, yet both grades remained at very elevated levels and repeatedly rebounded whenever the market saw evidence that the Strait of Hormuz problem had not been solved. The month also changed the benchmark structure: WTI temporarily traded above Brent during the early-April squeeze, but Brent’s premium was restored and widened later as seaborne logistics, European and Asian replacement demand, and the Iran port blockade again dominated pricing. As of April 29, Brent front-month futures rose by $1.43/bbl month-to-date to $105.40/bbl, providing a gain of 1.4%, while WTI slipped by $0.51/bbl to $100.87/bbl, down 0.5%. That flat-looking net result badly understates the intramonth volatility. Brent’s monthly high was $111.89/bbl on April 6, while WTI reached $117.63/bbl on April 7; the lows came on April 17, when Brent traded down to $86.09/bbl and WTI to $80.56/bbl.

May 2026 should begin as a high-volatility, two-way market with a bullish geopolitical floor but growing demand-destruction resistance. The late-April setup is still constructive technically: Brent closed April 29 at $105.40/bbl and WTI at $100.87/bbl, both above their 20-day and 50-day moving averages. Brent’s RSI is around 60 and WTI’s around 53, so momentum is positive but not yet exhausted. The market is therefore not technically too hot in the same way it was near the March panic highs, but daily ranges remain extreme, with 14-day ATR near $5.9/bbl for Brent and $6.3/bbl for WTI. The base case for May is further volatile consolidation with upside risk, rather than a clean directional bull trend. The main reason is that the geopolitical disruption has not been resolved: there were reports on April 29 that the U.S. prepared to extend its blockade of Iranian ports, meaning that the Strait of Hormuz disruption would continue to dominate crude price discovery. This keeps Brent’s first support near $100/bbl and WTI’s near $98-100/bbl. If those levels hold, Brent can retest $108-112/bbl in May, with the March/April panic zone around $119/bbl as the key upside resistance. For WTI, the comparable resistance band is $106-112/bbl, then the April spike near $117.6/bbl. The bear case requires evidence of real normalization, not diplomatic language alone: tankers moving through Hormuz at scale, an easing of the U.S. blockade, lower freight/insurance stress, and weaker product cracks. Spot crude premiums have already eased from record highs as refiners cut runs, draw inventories and seek alternative barrels, which shows that panic pricing can fade even while the disruption persists. In that scenario, Brent could break below $100/bbl and move toward $95/bbl, with a deeper test of $90/bbl if May demand destruction intensifies. WTI could fall toward $94/bbl first and then the mid-$80s. The bull case is simpler and more dangerous: if the port blockade is extended, Hormuz remains unreliable, or the conflict widens again, the market will likely treat late-April prices as a launchpad rather than a ceiling. OPEC+’s May quota increase is unlikely to offset this quickly, as the planned 206 kbd rise would mostly exist on paper while key Gulf exporters remain constrained. The U.A.E.’s planned exit from OPEC/OPEC+ is also more bearish for the medium term than for May, because alternative export capacity outside Hormuz appears already heavily used. Overall, May’s likely range is Brent $95-115/bbl and WTI $88-108/bbl, with the balance of risks still skewed upward unless physical shipping flows visibly normalize.

Global oil supply plummeted by 10.1 mbd to 97 mbd in March, according to the most recent assessments of the International Energy Agency, with continued attacks on energy infrastructure in the Middle East and ongoing restrictions to tanker movements through the Strait of Hormuz leading to the largest disruption in history. OPEC+ production fell 9.4 mbd month-on-month to 42.4 mbd while non-OPEC+ supply declined 770 kbd on a monthly basis to 54.7 mbd, as lower Qatari output offset gains in Brazil and the United States. Resuming flows through the Strait of Hormuz remains the single most important variable in easing the pressure on energy supplies. In early April, shipments through the Strait remained severely restricted, with loadings of crude, natural gas liquids and refined products averaging around 3.8 mbd, compared with more than 20 mbd in February ahead of the crisis. Exports through alternative routes – most notably from the west coast of Saudi Arabia and Fujairah on the east coast of the U.A.E., as well as the ITP pipeline that runs from Iraq to Ceyhan in Türkiye – had increased to 7.2 mbd from less than 4 mbd before the war. The overall loss in oil exports exceeds 13 mbd, with associated production curtailment and damage to energy infrastructure in the region resulting in cumulative supply losses of more than 360 mb in March and 440 mb projected for April.

The data of the U.S. Energy Information Administration also confirms that global oil production suffered a profound shock in March 2026. According to the agency, world liquids output fell to 98.2 mbd, down by 9.7 mbd from February, a 9.0% MoM contraction. That took global production to its lowest level in 53 months and delivered the steepest month-on-month decline in 70 months. The annual comparison also turned decisively negative: supply was lower by 5.6 mbd than in March 2025, representing a 5.4% YoY fall, which broke a 17-month upward trend and marked the sharpest annual decline in 59 months. The level was also 2.1 mbd below the five-year average for March, leaving world production 2.1% under its longer-term seasonal norm. The severity of the move is consistent with the abrupt reversal in the policy and logistical backdrop: on 1 March, eight OPEC+ countries were still formally planning to resume unwinding cuts by 206 kbd from April, but within days the war and the near-paralysis of Hormuz transit forced the market away from calibrated supply management and into involuntary shut-ins and export losses.

OPEC crude production fell sharply in March 2026 as the Gulf war and the effective paralysis of the Strait of Hormuz overwhelmed the gradual supply normalization that had still been visible in February. Total OPEC output dropped by 7.8 mbd from the previous month to 20.8 mbd, according to cartel’s own data. That was a 27.4% MoM contraction, the steepest monthly decline in this century, and it pushed the group to its lowest output level for more than 25 years. The fall also broke the prior upward monthly pattern that had lasted 15 months. On a yearly comparison, production was lower by 5.99 mbd, or -22.4% YoY, likewise posting the deepest annual decline since at least the start of 2000 year and a break of the 15-month upward run. Relative to the 5-year average for March, OPEC output was lower by 6.35 mbd, or -23.4%, which underlines just how extraordinary the shock was. According to independent reports, Gulf Arab producers lost about 40% of crude output in March, while the IEA described the conflict as the world’s biggest energy supply shock yet, with more than 12 mbd of regional shut-ins and damage to around 40 energy facilities.

The early-April OPEC+ decision deserves separate treatment because it came after the March production collapse yet still pointed to a formal increase in quotas. On 5 April, the eight participating countries decided to implement another 206 kbd production adjustment for May as part of the gradual return of the 1.65 mbd voluntary cuts announced in April 2023. OPEC’s statement framed the move as consistent with market stability and again stressed that the group retained full flexibility to increase, pause, or reverse the phase-out depending on conditions. However, the decision was effectively theoretical in the near term because war damage, shut-ins and export bottlenecks meant several Gulf producers could not physically deliver more oil even if their quotas were raised. The practical consequence, therefore, was not an immediate flood of new barrels, but a policy signal that OPEC+ wanted to reassure consumers, preserve credibility around its unwind roadmap, and show willingness to normalize once Hormuz and damaged infrastructure became operational again. So, the gap between quota space and effective supply widened further: nominal spare capacity still existed, but March had shown that usable export capacity and secure logistics had become the binding constraint.

Non-OPEC oil supply averaged 71.5 mbd in March. That was down by 1.2 mbd from February, equating to a decline of 1.7% MoM, and it pushed the aggregate production to the lowest level in 10 months. Against March 2025, output was still higher by 646 kbd, up 0.9% YoY, so the annual comparison technically remained positive, extending the year-on-year growth streak to 15 months. Even so, that annual gain was visibly weak by recent standards and marked the slowest pace of growth in 12 months, confirming that the supply backdrop outside OPEC had become materially less supportive even before considering the likely lagged effects of the war on April data. Relative to the five-year average for March, production remained higher by 3.2 mbd, or 4.6%, which means the non-OPEC block was still operating above its longer-run seasonal norm despite the March shock. There were two distinct stories in non-OPEC oil production data for the month: relative resilience in the Americas, Europe and much of Asia, and an outright collapse in the non-OPEC Africa & Middle East region, led overwhelmingly by Qatar, where production and export logistics were hit simultaneously.

U.S. total oil output averaged 23.7 mbd in March 2026, up by 73 kbd from February, or +0.3% MoM. That left aggregate production at the highest level of the past three months and extended the recovery from January’s weather-hit low into a second straight month, although the step-up was small enough to suggest that the rebound was already losing momentum by the end of the quarter. Against March 2025, total output was higher by 597 kbd, or +2.6% YoY, which not only prolonged the annual expansion to 18 months but also delivered the fastest annual growth rate in three months. Even so, the composition of that increase matters more than the headline: March did not bring a broad-based surge across all streams, but rather a modest aggregate gain driven mainly by NGLs while crude softened and the smaller components rose only marginally. Relative to the five-year average for March, total output remained elevated by 2.51 mbd, or +11.8%, confirming that the U.S. liquids system was still running at a historically high level even before any delayed response to the Gulf war could begin to materialize. The Gulf war sharply improved the relative strategic value of U.S. barrels and pushed price expectations materially higher, but the domestic supply response remained muted in real time, as shale producers said prices above $100 would need to persist for at least a quarter before materially altering drilling plans, and additional output would likely take six months to a year to reach market.

U.S. shale oil output came in at 10.478 mbd in March, down by 45.5 kbd from February, or -0.4% MoM. The decline was modest and far smaller than the earlier January disruption, which indicates that the core U.S. tight-oil system remained broadly stable through the month despite the extraordinary geopolitical backdrop. On a year-ago basis, shale production was still higher by 20.4 kbd, or +0.2% YoY, which kept the annual expansion streak intact, though at a markedly subdued pace compared with the stronger growth rates seen through most of the previous cycle. Relative to the five-year average for March, shale output remained higher by 1.10 mbd, or +11.7%, confirming that the segment continued to operate from a structurally elevated base even as momentum cooled. Shale accounted for 77.3% of total U.S. crude output in March, up by 43.7 bps from February and by 8.0 bps from a year earlier. So, March did not show a war-driven acceleration in U.S. shale volumes. The industry’s operating response remains slow, because producers are still sticking to pre-set spending plans and because even in U.S. shale additional barrels take time to mobilize.

The International Energy Agency estimated global oil demand to contract by 800 kbd year-on-year in March and by 2.3 mbd in April, as price and logistic consequences of the Iran war hit oil consumption. Initially, the deepest cuts in oil use have come in the Middle East and Asia Pacific, mainly for naphtha, LPG and jet fuel. Most notably, Asian petrochemical producers have curtailed operating rates as feedstock supply dried up. Households and businesses using LPG have also been impacted, while flight cancellations across the Middle East, parts of Asia and Europe have led to a sharp drop in jet fuel consumption. A growing number of countries have implemented policies to reduce demand, while others have put in place measures to shield consumers from the full impact of rising fuel prices. However, demand destruction will spread as scarcity and higher prices persist. Overall, now the IEA projects global oil demand to decline by 80 kbd on average in 2026, compared to growth of 730 kbd expected just a month ago and a forecast 1.5 mbd 2Q26 decline in global demand would be the sharpest since Covid-19 slashed fuel consumption.

The U.S. Energy Information Administration confirms that March 2026 marked a serious setback in global oil consumption and that the heaviest strain in oil demand was visible in the regions and countries which most directly exposed to the Gulf war shock: OECD Pacific, Japan, the Middle East and parts of Asia underperformed clearly, while Africa and Latin America still held up. Turning to numbers, global oil consumption averaged 103.0 mbd in March, sinking by 1.861 mbd from February, recording a decline of 1.8% MoM that pulled demand to the lowest level in 12 months. However, by contrast with the IEA’s estimates, the EIA’s data shows the consumption still remained higher than a year earlier by 877 kbd, up 0.9% YoY, extending the annual growth streak to 61 months, though the annual growth rate slowed to the weakest pace in four months. Relative to the March five-year average, demand was still 3.1 mbd higher, representing a 3.1% premium.

Global observed oil stocks fell by 85 mb in March 2026 according to the most recent data of the International Energy Agency, despite an accumulation of both on-land and offshore inventories in the Middle East and further builds in China, as consumers and refiners alike are tapping into oil inventories to mitigate the immediate impact of supply disruptions. Oil stocks outside of the Middle East Gulf drawn down in March by a significant amount of 205 mb, or -6.6 mbd, as flows through the Strait of Hormuz were choked off. The largest decline came from oil on water, while crude oil stocks in importing countries in Asia dropped by 31 mb, with further declines expected in April. At the same time, with limited outlets after the effective closure of the Strait, floating storage of crude and oil products in the Middle East rose by 100 mb and onshore crude stocks in the region were up by 20 mb. China added 40 mb of crude to tanks.

Detailed statistics on January 2026 broke preliminary IEA’s estimates that OECD commercial oil inventories continued to expand, and the month in fact brought a modest reversal after the product-led rebuilding seen at year-end. The total stockpile moved lower, with crude posted a more pronounced draw, and petroleum products were broadly stable rather than strong enough to offset the crude loss. Those dynamics were attributed mainly to the fact that global refinery crude throughputs fell from 86.3 mbd in December to 85.7 mbd in January as maintenance began and margins softened, while world oil supply also dropped by 1.2 mbd because severe winter weather disrupted North American operations and other outages hit non-OECD supply. At the same time, the IEA still viewed the global market as deeply oversupplied in 1Q26 because supply was running ahead of demand and refinery maintenance was seasonally reducing crude processing needs. A demand-side also took its toll to the overall picture as U.S. gasoline demand fell sharply during the winter storms, while distillate demand increased as cold weather lifted heating and power use.

Albeit March was the first full month to capture consequences of the oil market dislocation that followed the start of the Iran war and the effective closure of the Strait of Hormuz, U.S. total oil inventories demonstrated completed invulnerability and rose to 1 700 mb in March 2026, up 7.77 mb from February, equal to +0.5% MoM. That increase broke a two-month sequence of monthly declines and therefore marked the fastest monthly growth rate in three months. Against March 2025, total oil stocks in the United States were higher by 90.87 mb, or +5.6% YoY, extending the annual expansion to nine consecutive months and producing the strongest yearly growth rate in more than 5 years. Relative to the five-year average for March, the aggregate stood 5.43 mb higher, a surplus of 0.3%, so the overall U.S. oil holdings was only marginally above normal in level terms even as the internal composition shifted sharply. As the IEA estimated the war had already removed 10.1 mbd of global supply in March and warned losses could deepen further in April, March data likely captured only the first-round U.S. inventory effects rather than the full adjustment, implying very possible deterioration of the overall stocks in coming months.

Cushing crude inventories rose to 31.465 mb in March 2026, jumping up by 5.0 mb from February, or +18.9% MoM, and 6.39 mb above a year earlier, or +25.5% YoY. That lifted the hub to its highest level in 21 months and left it just 1.291 mb below the five-year average for March, a gap of 3.9%, so March marked a clear shift from acute tightness to near-normal stock cover. The monthly increase was the strongest in 13 months and extended the run of builds to four straight months, while the annual gain was the largest in 27 months and the third consecutive positive year-on-year reading. Weekly data confirmed that looser balance in real time, with Cushing building through March and reaching its highest level since August 2024. The Gulf war was central to that change. After the conflict began on February 28, disruption around Hormuz pushed Brent much higher relative to WTI, while firm U.S. inventories and planned SPR releases restrained the U.S. inland market. So, the war tightened the global market but initially reduced the risk of a renewed Cushing squeeze. In other words, Cushing entered April in a far less stressed condition than the seaborne market, although a prolonged Hormuz disruption could later strengthen export demand for U.S. crude and slow further stock builds.

Global offshore oil inventories rose sharply in March 2026, according to Vortexa Ltd., increasing to 140.07 mb from 114.90 mb in February. That was a gain of 25.17 mb, or +21.9% MoM, extending the sequential build to a second month and delivering the fastest monthly rise in four months. The level achieved was the highest in more than 5 years. Compared with March 2025, global offshore stocks were higher by 82.37 mb, up 142.8% YoY, which prolonged the annual uptrend to nine months and produced the strongest yearly increase in 66 months. Relative to the 5-year average for March, the world total stood 56.17 mb higher, providing a 67.0% surplus. Albeit the world total floating oil stocks rose to a 67-month high, the composition of the move mattered much more than the headline. The build was overwhelmingly concentrated in the Middle East Gulf, where cargoes were trapped or delayed near the main export chokepoints as the Strait of Hormuz was effectively shut, while Asia and the US Gulf Coast both drew and Europe remained historically tight as consuming regions start pulling harder on Atlantic Basin alternatives. March therefore looks less like a standard oversupply month and more like the first full inventory expression of a severe logistics shock. It seems that global offshore inventories remain elevated but far more unevenly distributed in coming months, with Middle East Gulf stocks staying unstable as the trapped-cargo queue clears and Atlantic Basin barrels remaining too valuable for prolonged floating storage.

AC - Oil Market Report - Apr-2026.pdf

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