IEA chief sees little chance of oil market normalizing next year
One Turn followed this story across 4 editions, from Brussels, Belgium on October 18, 2026. Newest first.
The war involving Iran damaged Gulf refineries and disrupted shipping through Hormuz and Bab al-Mandab. The IEA advises major consuming nations on energy security.
The head of the IEA said oil markets are unlikely to return to normal next year, with prices above $100 a barrel compared with under $70 before the war and diesel at record highs. Goldman Sachs said tanker freight rates have risen to $20 a barrel from $3, and Morgan Stanley expects fuel markets to stay tight through mid-2027. Middle East Eye reported Gulf oil exports exceed pre-war levels via ship-to-ship transfers and Red Sea routes.
Why it matters: Prolonged high fuel and shipping costs feed inflation in import-dependent economies such as Zimbabwe, Japan and Europe.
Oil prices fell as traders hoped for diplomatic progress, though attacks on Gulf shipping have escalated in recent weeks. Asian LNG prices rose above $30 per MMBtu, the highest since December 2022, and record freight costs are pushing Asian buyers to use smaller tankers. HSBC's chief executive said alternative export routes could make the Strait of Hormuz redundant within five years.
Why it matters: Energy and shipping costs feed directly into inflation and fuel prices for consumers worldwide.
Brent briefly hit $109.99 overnight, a five-month high, after Houthi claims of attacks on Saudi sites and Ukraine's strikes on Russian oil facilities, before retreating on signs of recovering Middle East supply. US Energy Secretary Chris Wright said gasoline prices have peaked; a US deal to import Russian diesel is under debate.
Why it matters: Oil near $110 feeds inflation and squeezes households and importers worldwide.
Europe faces rising fuel costs through winter as Middle East disruptions limit supply and threaten infrastructure, with consumers hit hard unless governments step in.
Why it matters: Higher heating bills add to the cost-of-living anger already driving protests across Europe.