Global oil markets ended March with their steepest monthly increase on record, as the ongoing US-Israeli war on Iran rattled energy markets and intensified fears over supply disruptions across one of the world’s most critical oil transit corridors.
Brent crude futures for May delivery rose 4.94% by the close of trading to $118.35 per barrel, while May futures for West Texas Intermediate (WTI) fell 1.46% to $101.38.
Despite the divergence in daily trading, both benchmarks recorded exceptional gains over the course of March. Brent climbed 63.3% during the month, while WTI advanced 51.3%, marking the sharpest monthly increases ever recorded in global oil markets. Reuters reported that oil benchmarks have risen by roughly 60% since the war began on February 28, with Brent on course for a historic monthly gain.
Oil shock
The surge comes as traders respond to a sharp tightening in supply expectations following Iran’s retaliatory measures in response to the assault, including restrictions on traffic through the Strait of Hormuz. That waterway carried around 20 million barrels per day in 2024, equivalent to about 20% of global petroleum liquids consumption, making any disruption there immediately consequential for world markets.
Broader market stress has deepened as shipping disruptions spread across the Gulf. A Reuters survey published Tuesday found that OPEC oil output fell by 7.3 million barrels per day in March to 21.57 million barrels per day, its lowest level since June 2020, as the war forced export cuts across Iraq, Kuwait, Saudi Arabia and the UAE.
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Market strain
The shock has extended beyond physical supply. Rising oil costs are increasing pressure on major importing economies, particularly those dependent on dollar-denominated energy purchases, while investors have rushed into futures markets to lock in supplies and hedge against further escalation. Reuters also reported that analysts sharply raised their 2026 oil price forecasts in March, warning that if the Strait remains closed, Brent could climb as high as $190 a barrel.
Beyond the immediate rally, the scale of the move points to wider economic consequences. Higher energy prices are feeding inflation, lifting transport and production costs, and adding to recession concerns across global markets.
Analysts cited by Reuters said the current disruption has already become the worst oil supply shock in history, underscoring that the March price spike reflects systemic crisis conditions rather than ordinary market volatility.
