Comparison to Pre-War and Post-War Lows

Before the conflict erupted in late February 2026, roughly 17 million barrels per day (mb/d) of oil transited the Strait of Hormuz, representing about 20% of global supply . The effective blockade of the strait from March through May cut flows dramatically. By June, Asia's imports of U.S. crude had surged to a record 63.56 million barrels in May, but this was still insufficient to compensate for the loss of Middle Eastern shipments . The EIA estimated production shut-ins peaked at roughly 6.7 mb/d .

By mid-July, S&P Global reported that Gulf oil flows were still 50% below pre-war levels . The escalation in July — including the U.S. naval blockade of Iran's entire coastline announced July 13 — pushed Brent to a one-month high . Asian refiners' plans to ramp up output in August were directly threatened .

The Fragile and Short-Lived Strait of Hormuz Ceasefire

The ceasefire was never durable: each truce was quickly broken, and Gulf oil flows never recovered to pre-war levels during July.

• Late June to early July: A temporary reopening of the strait allowed tanker traffic to resume faster than many analysts expected. Brent crude briefly fell back to pre-war levels around $71/barrel by July 2 . The U.S. president claimed "an oil glut" from vessels clearing the strait .
• July 8 collapse: The U.S. launched new strikes on Iran, and Brent surged more than 3% in a single day, reversing the slide back to pre-war prices .
• Mid-July escalation: The U.S. reimposed a full naval blockade of Iran's coastline on July 13, triggering a 9% single-day oil price surge . Iran began stopping ships in the strait again .
• Late July pause: On July 26–27, both sides paused strikes, raising hopes for diplomacy. Brent tumbled 4.1% on July 27 and continued falling to the mid-$80s by July 28 . However, no permanent deal was reached.

Brent Crude Price Movements in July 2026

July saw extreme intra-month volatility:

• July 2: ~$71/barrel, pre-war pricing on ceasefire hopes
• July 8: Surged >3%, U.S. strikes on Iran
• July 13: +9% to one-month high, U.S. announces full naval blockade
• July 14–15: ~$84.91, blockade takes effect, Brent at 4-week high
• July 20: >$90/barrel, U.S. and Iran expand attacks
• July 24: ~$100/barrel, Iran dismisses U.S. ceasefire proposal
• July 27: -4.1% (to ~$84), U.S. and Iran pause strikes
• July 28: ~$86.52 (falling further), pause holds, hopes for de-escalation
• July 31: ~$88/barrel, more supplies flow, still on track for ~20% monthly gain

Brent closed July up roughly 20% for the month, despite the late-month pullback . The EIA's July Short-Term Energy Outlook forecast Brent averaging $96/barrel for full-year 2026 and $76 in 2027 .

Energy Sector Cash Flow Projections

Analysts revised oil price forecasts sharply higher through 2026:

• Market deficit: Analysts warned the Iran war would flip the global oil market into a supply deficit in 2026, with the most acute shortfall in Q2 and a potential surplus not emerging until Q4 .
• Strait normalization timeline: The EIA assumed Strait of Hormuz oil shipments resume in Q3 2026 but would take "several months to ramp up" and not reach pre-conflict traffic until early 2027 .
• Downside risks: Analysts warned that without a lasting reopening of the strait, oil, refined products, and LNG markets would face "mounting stress into the fall" .

By late May, a Reuters poll of 33 economists and analysts projected Brent averaging $84.44/barrel for 2026 and WTI at $84.63 . The EIA's April outlook assumed Brent at $103/barrel in March 2026 .

Japanese Trading House Earnings: Winners and Losers

Japan's big five trading houses were major beneficiaries of the supply disruption:

• Record profit forecasts: Marubeni, Itochu, and Sumitomo all guided for record yearly profits in FY2026, while Mitsui and Mitsubishi also projected profit increases .
• Mitsubishi Corp: Forecast net income could rise 37% to ¥1.1 trillion ($7 billion) on strong gas and copper businesses .
• Sumitomo Corp: Projected its fifth consecutive year of record profit .
• Contrast with utilities: Domestic utility companies warned of potential profit declines due to rising energy costs . Tokyo Gas reported a 65% decline in April–June net profit, partly due to the absence of one-off gains, though its U.S. shale gas business boosted revenue .
• Macro pressure: Bloomberg estimated a 10% gain in Brent would shave 1–2% off Japanese companies' net income overall . The Bank of Japan flagged mounting inflationary pressure from the war, raising the likelihood of further interest rate hikes .

Outlook for Sustained Normalization: Highly Uncertain

The path to normalization remained deeply uncertain as of late July 2026:

• No diplomatic breakthrough: Iran dismissed a U.S. ceasefire proposal in late July, and talks showed no major progress .
• Recurring escalation: Each period of de-escalation was followed by renewed strikes, making durable reopening of the strait elusive.
• Slow recovery timeline: Even in a best-case diplomatic scenario, the EIA said Hormuz traffic would not return to pre-war levels until early 2027 .
• Houthi threat: Iran asked Yemen's Houthis to stand ready to close the Red Sea oil route, adding another chokepoint risk .
• Structural bullish pressures: The combination of persistent supply disruption, depleted global inventories, and slow ramp-up of alternative flows (U.S. crude, SPR releases) kept the market structurally tight .

In short, July 2026 was a month of whiplash — a brief return to pre-war pricing, a dramatic spike to $100, and a late-month pullback — but with no lasting resolution. Asian import volumes recovered only fractionally from crisis lows, and the Strait of Hormuz ceasefire proved a temporary reprieve, not a turning point. Japan's trading houses posted record profit guidance from elevated energy prices, while the broader outlook hinged entirely on whether U.S.-Iran diplomacy could produce a durable reopening of the strait — a prospect that remained out of reach.

Comparison to Pre-War and Post-War Lows

Before the conflict erupted in late February 2026, roughly 17 million barrels per day (mb/d) of oil transited the Strait of Hormuz, representing about 20% of global supply . The effective blockade of the strait from March through May cut flows dramatically. By June, Asia's imports of U.S. crude had surged to a record 63.56 million barrels in May, but this was still insufficient to compensate for the loss of Middle Eastern shipments . The EIA estimated production shut-ins peaked at roughly 6.7 mb/d .

By mid-July, S&P Global reported that Gulf oil flows were still 50% below pre-war levels . The escalation in July — including the U.S. naval blockade of Iran's entire coastline announced July 13 — pushed Brent to a one-month high . Asian refiners' plans to ramp up output in August were directly threatened .

The Fragile and Short-Lived Strait of Hormuz Ceasefire

The ceasefire was never durable: each truce was quickly broken, and Gulf oil flows never recovered to pre-war levels during July.

• Late June to early July: A temporary reopening of the strait allowed tanker traffic to resume faster than many analysts expected. Brent crude briefly fell back to pre-war levels around $71/barrel by July 2 . The U.S. president claimed "an oil glut" from vessels clearing the strait .
• July 8 collapse: The U.S. launched new strikes on Iran, and Brent surged more than 3% in a single day, reversing the slide back to pre-war prices .
• Mid-July escalation: The U.S. reimposed a full naval blockade of Iran's coastline on July 13, triggering a 9% single-day oil price surge . Iran began stopping ships in the strait again .
• Late July pause: On July 26–27, both sides paused strikes, raising hopes for diplomacy. Brent tumbled 4.1% on July 27 and continued falling to the mid-$80s by July 28 . However, no permanent deal was reached.

Brent Crude Price Movements in July 2026

July saw extreme intra-month volatility:

• July 2: ~$71/barrel, pre-war pricing on ceasefire hopes
• July 8: Surged >3%, U.S. strikes on Iran
• July 13: +9% to one-month high, U.S. announces full naval blockade
• July 14–15: ~$84.91, blockade takes effect, Brent at 4-week high
• July 20: >$90/barrel, U.S. and Iran expand attacks
• July 24: ~$100/barrel, Iran dismisses U.S. ceasefire proposal
• July 27: -4.1% (to ~$84), U.S. and Iran pause strikes
• July 28: ~$86.52 (falling further), pause holds, hopes for de-escalation
• July 31: ~$88/barrel, more supplies flow, still on track for ~20% monthly gain

Brent closed July up roughly 20% for the month, despite the late-month pullback . The EIA's July Short-Term Energy Outlook forecast Brent averaging $96/barrel for full-year 2026 and $76 in 2027 .

Energy Sector Cash Flow Projections

Analysts revised oil price forecasts sharply higher through 2026:

• Market deficit: Analysts warned the Iran war would flip the global oil market into a supply deficit in 2026, with the most acute shortfall in Q2 and a potential surplus not emerging until Q4 .
• Strait normalization timeline: The EIA assumed Strait of Hormuz oil shipments resume in Q3 2026 but would take "several months to ramp up" and not reach pre-conflict traffic until early 2027 .
• Downside risks: Analysts warned that without a lasting reopening of the strait, oil, refined products, and LNG markets would face "mounting stress into the fall" .

By late May, a Reuters poll of 33 economists and analysts projected Brent averaging $84.44/barrel for 2026 and WTI at $84.63 . The EIA's April outlook assumed Brent at $103/barrel in March 2026 .

Japanese Trading House Earnings: Winners and Losers

Japan's big five trading houses were major beneficiaries of the supply disruption:

• Record profit forecasts: Marubeni, Itochu, and Sumitomo all guided for record yearly profits in FY2026, while Mitsui and Mitsubishi also projected profit increases .
• Mitsubishi Corp: Forecast net income could rise 37% to ¥1.1 trillion ($7 billion) on strong gas and copper businesses .
• Sumitomo Corp: Projected its fifth consecutive year of record profit .
• Contrast with utilities: Domestic utility companies warned of potential profit declines due to rising energy costs . Tokyo Gas reported a 65% decline in April–June net profit, partly due to the absence of one-off gains, though its U.S. shale gas business boosted revenue .
• Macro pressure: Bloomberg estimated a 10% gain in Brent would shave 1–2% off Japanese companies' net income overall . The Bank of Japan flagged mounting inflationary pressure from the war, raising the likelihood of further interest rate hikes .

Outlook for Sustained Normalization: Highly Uncertain

The path to normalization remained deeply uncertain as of late July 2026:

• No diplomatic breakthrough: Iran dismissed a U.S. ceasefire proposal in late July, and talks showed no major progress .
• Recurring escalation: Each period of de-escalation was followed by renewed strikes, making durable reopening of the strait elusive.
• Slow recovery timeline: Even in a best-case diplomatic scenario, the EIA said Hormuz traffic would not return to pre-war levels until early 2027 .
• Houthi threat: Iran asked Yemen's Houthis to stand ready to close the Red Sea oil route, adding another chokepoint risk .
• Structural bullish pressures: The combination of persistent supply disruption, depleted global inventories, and slow ramp-up of alternative flows (U.S. crude, SPR releases) kept the market structurally tight .

In short, July 2026 was a month of whiplash — a brief return to pre-war pricing, a dramatic spike to $100, and a late-month pullback — but with no lasting resolution. Asian import volumes recovered only fractionally from crisis lows, and the Strait of Hormuz ceasefire proved a temporary reprieve, not a turning point. Japan's trading houses posted record profit guidance from elevated energy prices, while the broader outlook hinged entirely on whether U.S.-Iran diplomacy could produce a durable reopening of the strait — a prospect that remained out of reach.