Crude Oil & Petroleum Product Prices Increased Sharply in the First Quarter of 2026

Crude oil and petroleum product prices experienced a sharp rise during the first quarter of 2026, driven primarily by geopolitical tensions in the Middle East. Following military action on 28 February and the effective closure of the Strait of Hormuz, Brent crude oil prices surged from $61 per barrel at the start of the year to $118 per barrel by the end of March. This marked the largest inflation-adjusted quarterly price increase since 1988. The disruption to shipping traffic and oil production cuts by key Middle Eastern producers, including Iraq, Saudi Arabia, and the UAE, further exacerbated supply concerns and pushed prices higher. The price gap between Brent crude and West Texas Intermediate (WTI) widened significantly in March, reflecting regional supply dynamics. Brent crude, more exposed to Middle Eastern shipping disruptions and higher transport costs, rose more steeply than WTI, which benefited from robust US inventories and planned releases from the Strategic Petroleum Reserve. The Brent-WTI spread peaked at $25 per barrel by the end of March, the highest level in over five years, underscoring the growing divergence between global and US crude markets. Petroleum product prices also climbed sharply, with gasoline, distillate, and jet fuel all seeing notable increases. Supply disruptions in Middle Eastern exports, combined with rising crude oil input costs, pushed US retail gasoline prices to their highest real levels in over two years. Distillate and jet fuel prices rose even more steeply due to tighter supply conditions, driven by increased US exports to Europe amid Russian sanctions, unusually cold weather boosting heating demand, and stronger trucking activity. The close refining relationship between distillate and jet fuel meant that price movements in one fuel influenced the other. Refinery activity in the US remained strong throughout the quarter, with inputs and utilisation rates exceeding the recent five-year average. High distillate prices improved refinery margins, incentivising increased processing of crude oil. A relatively light maintenance season in late 2025 also contributed to sustained refinery operations in early 2026. Overall, these factors combined to maintain tight market conditions and support elevated petroleum product prices as the quarter progressed.