United States President Donald Trump appears determined to push oil prices down, seeking, according to leaks from Washington, an intense – though still unclear – dialogue with Tehran aimed at de-escalating the crisis in the Persian Gulf.
Formally, the objective is clear: reopen the taps, restore the flow of crude oil and LNG through the Strait of Hormuz and bring prices back to more “reasonable” levels. In practice, however, the current energy crisis is proving far more complex and largely unique, because the real shock is appearing in refined products rather than only in crude oil prices.
Historic energy shock
An extensive analysis in the 16th annual “Eye on The Market” report by J.P. Morgan, signed by Michael Cembalest, chairman of the Market and Investment Strategy unit at J.P. Morgan Asset & Wealth Management, describes an energy shock of historic proportions that will not ease even if the war were to end tomorrow morning.
If the Israel–US war against Iran continues, fuel prices are expected to rise further, increasing the cost of airline tickets and fertilisers and affecting the competitiveness of tourism as well as food prices.
The partial paralysis of the Strait of Hormuz, attacks on critical energy infrastructure and the redirection of crude oil and LNG flows have removed around 19–20 million barrels per day of liquid fuels and petrochemical feedstocks from the market, roughly 18–20% of global supply.
This represents the largest disruption since the Second World War, at a time when the oil intensity of global GDP has fallen by half compared with 1990, yet oil still sustains transport, industry and supply chains.
The shock spreads through refineries
The distinctive feature of the crisis, as described by Cembalest, is that the shock does not stop at the level of Brent or US crude prices but multiplies within refineries.
Aviation fuel, marine fuel and motor fuels are recording much larger increases than crude oil itself, as refining margins, transport costs, war-risk insurance premiums and shortages of suitable crude grades create an explosive combination.
Indices for aviation fuel in Singapore, north-west Europe and the US Gulf Coast, as well as bunker fuel prices in key ports, have significantly outpaced Brent since the start of 2026.
In other words, the crisis is hitting consumers and businesses where it hurts most: at petrol stations, in airline ticket prices, in shipping freight rates and in the cost of fertilisers.
Damage to Qatar’s infrastructure
Several factors explain this phenomenon.
First, attacks on infrastructure in Qatar, including the destruction of two out of 14 LNG units and one gas-to-liquids facility, have removed 12.8 million tonnes of LNG from the market for a period estimated at three to five years. This volume corresponds to roughly 17% of the country’s production.
At the same time, exports of naphtha, sulphur and helium – key by-products for refineries, fertilisers, petrochemicals and high-technology industries – have been significantly reduced.
Disruption of flows through Hormuz
Second, around 21 million barrels per day of crude oil and products that previously passed through the Strait of Hormuz before the war have been reduced.
Of this amount, 14–15 million barrels per day are now considered effectively trapped, while another five million barrels of equivalent correspond to petrochemical feedstocks, such as LPG and ethane, which are also not reaching the market.
This simultaneous shortage of crude and feedstocks dramatically increases the value of every barrel that can still reach refineries and industrial facilities.
Shipping rerouting increases costs
Third, the rerouting of three to four million barrels per day of Saudi oil through the Red Sea and the Bab el-Mandeb strait, under the threat of Houthi attacks, has increased transit times, freight rates and insurance costs.
The route through the Suez Canal has limitations, as the largest VLCC tankers cannot pass and Suezmax vessels are limited and largely committed to supplying Europe.
The additional costs from rerouting are not borne by oil producers but by refineries and, ultimately, by end consumers.
Strategic reserves fail to calm markets
Fourth, government responses have added pressure rather than easing it.
The coordinated release of 400 million barrels from strategic reserves – equivalent to around 45 days of imports for International Energy Agency countries – has largely been ignored by markets.
The flow could reach up to two million barrels per day and represents only about 20% of global strategic reserves.
Unlike the Gulf War in 1991, when a similar move pushed Brent and WTI prices down by 40%, today’s deeper and more complex market appears largely immune to such interventions.
The expected easing in crude prices in futures markets has not been matched by an equally rapid decline in natural gas prices in Europe and Asia or in specialised refined products.
Impact spreads to industrial commodities
Fifth, the shock is spreading across the broader commodities sector, revealing how dependent global production remains on oil and natural gas derivatives.
The J.P. Morgan report notes that petrochemicals derived from oil and gas form the “DNA” of more than 95% of industrial products, including plastics, fertilisers, medicines, synthetic fibres, automotive materials and medical equipment.
For example, around 40% of global methanol production originates in the Middle East and is now effectively trapped, with prices rising by roughly 50% since the beginning of the year.
At the same time, basic petrochemical feedstocks such as propylene, ethylene, benzene and toluene have increased by between 20% and more than 100% in some Asian and European markets, triggering price increases in packaging, textiles, detergents and the automotive industry.
Pressure on fertilisers and food production
In the agricultural sector, the Middle East plays a significant role in global food production.
In 2024 the region accounted for 43% of global urea supply, 44% of sulphur and 27% of ammonia, all essential components for fertiliser production.
In a market where European production of nitrogen fertilisers has already been operating at reduced capacity – around 75% since 2022 – and Russian ammonia exports collapsed after the destruction of the Togliatti–Odesa pipeline, the crisis in the Strait of Hormuz adds pressure to an already fragile supply chain.
International urea prices, the most widely used nitrogen fertiliser, are again on the rise, while composite fertiliser price indices in North America and Brazil are rebounding, anticipating a new cycle of increases in food production costs.
A deeper structural crisis
In this environment, the attempt by the US administration to control oil prices through short-term measures – whether through strategic reserves or political pressure on allies and rivals – appears insufficient in the face of a crisis that is more a crisis of refining and industrial feedstocks than a simple crude oil shortage.
International markets are being forced to price in prolonged high costs, both to reduce demand and to create incentives for new investment in production, infrastructure and storage.
The J.P. Morgan report concludes that, as in the 1970s, the current crisis will likely accelerate a shift towards greater energy efficiency and reduced dependence on geopolitically vulnerable fossil fuel imports.
The difference this time is that the challenge is not only to replace the barrel of crude oil, but also to redesign entire value chains – from refineries and petrochemicals to fertilisers and high technology – which today appear to be the real “powder keg” of the global economy.