Petroleum markets in the second quarter of 2026 were characterized by continued disruptions to crude oil and petroleum product flows through the Strait of Hormuz, contributing to higher and more volatile crude oil prices through most of the quarter and driving up U.S. refinery margins, production, and exports, the U.S. Energy Information Administration reported on July 16 in its quarterly petroleum review.
Brent crude swings from $118 to $72 in a single quarter
The front-month futures price of Brent crude oil traded in a wide range in Q2, reaching a high of $118 per barrel on April 29 and falling to a low of $72 per barrel on June 26.
That $46 swing in a single quarter illustrates how sharply the market repriced risk as the geopolitical picture evolved.
The price of Brent crude began the quarter above $100 per barrel as disruptions to international crude oil flows through the Strait of Hormuz reduced access to crude oil for much of the world and led many countries in the Middle East to shut in crude oil production.
Uncertainty around reopening the Strait of Hormuz to shipping traffic contributed to highly volatile prices in April and May, with an average daily price swing of $4 per barrel in Brent, compared with $1 per barrel in the same months in 2025.
From May 18 to June 17, negotiated ceasefires and growing market anticipation for the resumption of shipping traffic through the Strait of Hormuz led the Brent crude oil price to decline by an average of more than $1 per barrel per day.
U.S. refineries ran hardest since 2019
U.S. refineries operated at unseasonally high levels during the quarter, processing the highest volume of crude oil for a second quarter since 2019, when refining capacity was four percent higher.
The average gasoline crack spread was 60 percent higher than a year ago, while distillate and jet fuel crack spreads were more than double their levels from the same period last year due to tight international supply.
Higher global demand to replace lost jet fuel volumes led some refiners to shift their refinery yield to maximize jet fuel output for exports.
The EIA estimated that jet fuel production was 24 percent higher than the five-year average because of higher refinery runs and higher jet fuel yields. Distillate production was five percent higher and motor gasoline production was only one percent higher over the same period.
Distillate and jet fuel exports reach all-time records
U.S. distillate and jet fuel exports reached record highs in the second quarter as disruptions to supplies through the Strait of Hormuz tightened global refined product markets.
Distillate exports averaged 1.56 million barrels per day, 30 percent higher than the five-year average, and jet fuel exports averaged 356,000 barrels per day, more than double the five-year average.
Compared with the first quarter of 2026, U.S. distillate shipments increased to all major export markets. Jet fuel exports increased substantially to Europe, while remaining about the same to most other destinations.
U.S. petroleum exports surged to a monthly record in April at the height of the disruption, according to EIA data.
Prices and margins expected to ease as shipping resumes
On June 17, the United States and Iran signed a Memorandum of Understanding that, among other things, sought to resume traffic through the Strait of Hormuz.
Following the signing and increased traffic through the strait, the EIA raised its expectations for global oil production for the rest of the year, now expecting worldwide crude oil production and trade flows to rebound to near pre-conflict levels by year-end, with most previously shut-in production returning online by the first quarter of 2027.
The Brent crude oil spot price averaged $85 per barrel in June, down $22 per barrel from May and $32 per barrel from its April peak.
The EIA’s July forecast projects further declines in Brent crude prices through the third quarter of 2026 as supply returns.
Lower crude oil prices are expected to contribute to retail gasoline prices falling by about 41 cents per gallon in the third quarter compared with Q2, averaging just under $3.80 per gallon. The EIA forecasts U.S. average retail gasoline prices to average about $3.60 per gallon in the second half of the year, down from $4.48 per gallon in May.
The Q2 export surge also drew on America’s substantial production advantage. U.S. crude output significantly outpaced Russia and Saudi Arabia in 2025, giving American refiners the raw-material headroom to ramp up rapidly when global demand called for it.
