Global Oil Prices Peaked to US$119.50/b Amid Middle East Conflict

Crude oil prices rose sharply as conflict in the Middle East impacted production and disrupted shipping routes. Brent crude reached an early peak of US$119.50/b before trading at approximately US$101/b, marking a 9% increase. 

West Texas Intermediate (WTI) followed a similar trajectory, soaring above US$119.48/b before retracting toward the US$100/b level. The surge coincides with the appointment of Ayatollah Mojtaba Khamenei as Iran’s new leader, signaling a continuation of the conflict despite sustained bombardment by US and Israeli forces.

The war has significantly impeded energy logistics in the Persian Gulf, particularly through the Strait of Hormuz. According to Rystad Energy, approximately 15MMb of oil, representing 20% of global supply, typically passes through this strait daily. Military threats have halted tanker traffic from major exporters, including Saudi Arabia, Kuwait, Iraq, Qatar, Bahrain, and UAE. 

In Bahrain, a desalination plant was struck, and the national oil company declared force majeure after Iranian attacks set its refinery complex on fire, reports AP. Meanwhile, oil depots in Tehran were targeted by Israeli strikes. Iraq, Kuwait, and UAE have reduced production as storage tanks reach capacity due to export limitations.

International Response

The G7 nations met to discuss the crisis but decided against the immediate use of emergency oil stockpiles. While French President Emmanuel Macron initially suggested dipping into reserves, the group later stated it was not yet necessary, though they remain prepared for coordinated action to stabilize markets. Similarly, US President Donald Trump indicated that the Strategic Petroleum Reserve would not be accessed at this time, citing ample domestic supplies. China, which imports approximately 1.6MMb daily from Iran, has called for a cessation of hostilities and stated it would take measures to ensure energy security if Iranian exports remain disrupted. In South Korea, the government warned against price hoarding as the Kospi index fell 6% in response to energy volatility.

The spike in crude costs has caused an immediate rise in US retail fuel prices. According to AAA, the average price of regular gasoline reached US$3.48 per gallon, a US$0.50 increase in one week. Diesel prices rose more than US$0.80 cents to US$4.66 per gallon. Natural gas also saw an uptick, trading at US$3.34/Mcfd. These increases have renewed concerns regarding inflation and consumer spending, as oil futures have not reached these levels since the 2022 Russian invasion of Ukraine.

Mexico’s Mix Above US$70/b 

Mexico’s crude export blend closed the March 5, 2026, session at US$75.24/b, according to data from Banxico. This price represents its highest level in over two years. For Mexico, this price surge arrives at a complex moment for national energy and fiscal policy.

President Claudia Sheinbaum has previously argued that Mexico is insulated from oil price swings as a consumer, given that virtually all domestically produced crude is refined domestically. As a net oil exporter, however, Mexico stands to benefit fiscally from these elevated prices, provided the global disruption does not trigger a broader recession that dampens demand for Mexican exports, as reported by MBN.

To mitigate potential risks, the federal government secured oil revenue protection through petroleum hedges contracted in early January 2026. Minister of Finance Edgar Amador confirmed the operation, though the strike price and covered volumes remain confidential to protect the effectiveness of the hedge.