At dawn on 19 September, air-raid sirens sounded over Riyadh for the first time since the peak of the US-Iran war. A Houthi ballistic missile was intercepted over the Saudi capital. A week later, the Houthis fired two more missiles and two drones at Riyadh and Khamis Mushait. By the last day of September, Brent was back above $100 a barrel after its strongest monthly gain since July.
For energy trading desks, this is no longer a shock. It is the operating environment. Seven months after the first US strikes on Iran, volatility has not faded. It has moved from one flashpoint to the next. Each pause has been followed by a new disruption, and sanctions between the major powers have added to the instability instead of calming it.
Here is how it unfolded, phase by phase, and what it means for anyone who manages energy price risk.
Phase 1: The shock (late February to early March)
On 28 February, the US and Israel launched strikes on Iranian leadership and military sites. Iran retaliated with missiles and drones aimed at US bases in Bahrain, Kuwait, Jordan and Iraq. The oil market repriced Gulf risk almost overnight.
In the first week of March, WTI jumped 35%. That was its largest weekly gain since crude futures began trading in 1983. Brent rose 28% to $92.69. By 9 March, prices briefly approached $120, the first move above $100 since early 2022.
A risk premium that had been a few dollars became tens of dollars. Positions that were comfortably hedged on a Friday were outside their limits by the following week.
Phase 2: Hormuz and the whiplash (March to May)
Iran blockaded the Strait of Hormuz, the route for about 20 million barrels a day before the war. Iraq declared force majeure. Prices stopped trending and started whipsawing.
- Basis blew out. In mid-March, the Brent-WTI spread passed $15, the widest since 2012. On 1 April, it flipped, and WTI traded above Brent for the first time since 2009.
- Daily moves became extreme. When a ceasefire was announced in early April, Brent fell more than 13% in a day, the largest one-day drop since April 2020.
- The ceasefire did not hold. Tensions resumed within weeks. On 30 April, Brent touched $126, a four-year high, before closing at $114.
- Headlines drove every swing. In May, Brent moved between roughly $94 and $114 as hopes for a deal rose and faded.
- They see exposure in real time. When Brent can move 13% in a session, an end-of-day position report is already out of date. Traders and risk managers need to see net exposure by commodity, tenor and location as trades are booked.
- They measure risk on current volatility. Value at Risk (VaR) models calibrated on calm years understate today's risk. Limits need to reflect the market as it is, with stress tests built on scenarios like a Hormuz closure or a new sanctions announcement.
- They track basis, not just flat price. The Brent-WTI spread has swung by more than $15 and inverted this year. Desks hedging one benchmark against exposure to another need to see that spread risk clearly.
- They plan for liquidity. Sharp moves bring margin calls. Knowing in advance how much cash a stress move would demand is as important as knowing the profit and loss.
- They link physical and paper positions. Rerouted cargoes, delayed loadings and force majeure notices change physical exposure. Those changes need to flow into the risk view immediately, not through a weekly spreadsheet update.
A desk could be right about direction and still lose money on timing, basis or margin calls.
Phase 3: A false calm, then a wider front (June to September)
In June, the market briefly believed the worst was over. The US and Iran signed a 14-point memorandum of understanding, and tanker transits through Hormuz resumed. On 24 June, Brent fell to $73.74, its lowest level since the day before the war began.
The calm lasted 22 days before the agreement collapsed. On 13 July, the US struck Iranian positions to protect shipping, and Iran fired missiles and drones at the UAE, Qatar, Kuwait, Oman, and Bahrain. Traffic through Hormuz fell to six vessels in two days, against about 130 a day before the war.
The conflict then spread to a second chokepoint. In August, the Houthis attacked ships in the Bab al-Mandeb Strait, putting Red Sea routes at risk too. Brent climbed back toward $90.
September brought the attacks on Saudi Arabia. The 19 September alerts over Riyadh were followed by the 26 September strikes. Brent gained about 14% in the month to trade near $103 on 30 September. Saudi Arabia has resumed loadings at Yanbu on the Red Sea, and Middle East exports reached 16.3 million barrels a day in September. That is the highest since the war began, but still below pre-war levels, and the routes now carrying it are themselves under threat.
Phase 4: Sanctions add a second layer of risk
While the Gulf conflict cut physical supply, policy between the major powers made it worse instead of steadying the market. The fighting has largely paused, but the US has shifted to economic pressure on Iran: sanctions and port blockades. Talks on sanctions relief, with Qatar involved, have produced no breakthrough.
In mid-September, the US Congress passed the Sanctioning Russia Act of 2026. It authorizes tariffs of up to 100% on the top five buyers of Russian energy and up to 500% on Russian imports into the US. The tariffs are not automatic, so the market now has to price a decision that could come at any time.
The exposure falls mainly on China, which buys about half of Russia's crude exports, and India, which buys about 37%. If either sharply cuts Russian purchases, it will have to compete for other barrels in a market already squeezed by Hormuz. Concerns about possible US diesel export limits have also widened the Brent-WTI spread to a four-month high.
The result is that geopolitical risk now arrives through two channels at once. One is physical: missiles, blockades, and closed shipping lanes. The other is regulatory: sanctions, tariffs, and export controls that can redirect trade flows with a single announcement.
What this means for energy trading and risk desks
Seven months of this have shown that volatility is no longer an exception to plan around. It is the starting assumption. Desks that are coping well have a few things in common.
Spreadsheets were built for a slower market. They break down when prices, routes, and rules change several times in a week.
The new normal
Every phase of this conflict has ended with the market more exposed than before. The strikes put the Gulf supply at risk. The Hormuz blockade turned that risk into lost barrels. The failed ceasefire showed that calm can end in weeks. The Houthis' attacks on Saudi Arabia reached the routes built to get around Hormuz. Sanctions and tariffs between the US, Russia, China, and India have added a policy shock on top of the physical one.
None of this is likely to settle soon. The US Energy Information Administration does not expect Middle East production to approach pre-war levels until early 2027. For energy desks, the question is not whether the next spike comes, but whether they will see their exposure in time.
See how Quoreka ETRM helps energy desks manage risk in volatile markets. Talk to our team.
October 1, 2026
