The Iran war's disruption to global crude oil and LNG markets is already being measured in lost barrels and higher prices, according to Reuters. Now, with a U.S.-Iran peace deal expected to reopen the Strait of Hormuz, the reckoning begins: was this a watershed moment, or merely another blip?
Precedents for Market Adaptation
Reuters draws two precedents. The Volkswagen "Dieselgate" scandal in 2015 seemed innocuous at first, but signalled the demise of diesel passenger cars and the rise of electric vehicles (EVs). By contrast, Russia's 2022 invasion of Ukraine caused a dramatic surge in energy prices, yet the market's ability to reroute flows and absorb the shock meant the impact proved short-lived.
Lost Barrels and Supply Disruptions
Since the U.S.-Israeli attacks on Iran began on February 28, the Strait of Hormuz has been effectively closed. Reuters reports that at least 1 billion barrels of crude oil and refined products have been lost from Middle East producers such as Iraq, Kuwait, the United Arab Emirates, and Iran itself. As much as 20% of global liquefied natural gas (LNG) supply is also trapped in the narrow waterway between Iran and Oman.
A combination of strategic and commercial inventory releases and a dramatic reduction in imports by China, the world's biggest crude importer, has helped keep benchmark Brent crude futures under $100 a barrel for much of the current crisis, according to Reuters. Optimism about a deal to reopen the Strait has also played its part, with traders believing President Donald Trump's numerous social media posts that an agreement was imminent.
Peace Deal and Immediate Market Impact
That long-awaited deal began to materialise on Sunday when the U.S. and Iran announced they had agreed on a framework that could allow vessels to resume transit. By Monday, Trump said oil tankers were starting to move out of the Strait. While full details have yet to be publicly revealed, the prospect of tankers soon entering and exiting without hindrance raises the question of what happens next.
Reuters outlines a three-phase effect: first, a short-term relief for energy markets as trapped tankers exit and deliver cargoes; second, efforts to restore flows and supply chains to pre-war levels; third, the longer process of rebuilding depleted inventories. This could mean crude oil and LNG prices stay higher for longer as lost barrels are replaced, but much will depend on how rapidly Middle East producers can ramp up output and whether OPEC+ can pump the higher volumes it has agreed to produce.
Long-Term Behaviour Changes
The bigger question is the long-term impact, especially in energy-hungry Asia. Consumers who can change are likely to consider switching to electric or hybrid vehicles to insulate themselves from future diesel and gasoline price shocks, Reuters notes.
An early snapshot comes from Australia, the world's biggest importer of diesel and a country reliant on overseas refineries for over 80% of its fuel requirements. Australian EV sales hit a record high in May, with a market share of 20%, and when combined with hybrid vehicles, the share climbed to 46%. This approaches levels in China, the leading EV manufacturer, where EVs and hybrids accounted for more than 50% of sales in 2025 and rose to 60% in May this year.
Government policies are also shifting. Dieselgate saw motor fuel fall out of favour in Europe, where its share of passenger car sales dropped from around 52% in 2015 to under 10% by 2025. Asian countries such as Vietnam are already putting in place policies to encourage EVs and electric scooters, and that momentum is likely to grow across the region.
The table below summarises the EV/hybrid market share trends cited by Reuters:
| Region | Metric | Value | Period |
|---|---|---|---|
| Australia | EV market share | 20% | May 2026 |
| Australia | EV + hybrid share | 46% | May 2026 |
| China | EV + hybrid share | >50% | 2025 |
| China | EV + hybrid share | 60% | May 2026 |
| Europe | Diesel car sales share | ~52% | 2015 |
| Europe | Diesel car sales share | <10% | 2025 |
For commodity traders and analysts, the key takeaway is that while a short-term price relief is likely as the Strait reopens, the structural shift in demand—accelerated by the crisis—could reshape long-term oil and LNG demand profiles. The Iran war may prove to be a turning point not just for energy shocks, but for the global energy transition.
Sources:
