Oil and Gas Price Trends: Q3 2026 Review and Forecast

Oil prices swing as Middle East conflict keeps markets on edge

Oil started the quarter close to pre-war levels.

According to the US Energy Information Administration (EIA), the July 1 low reflected improved tanker traffic through the Strait of Hormuz in June, following a June 17 memorandum of understanding.

That calm was short-lived. Military strikes resumed on July 7, and Brent climbed to US$100.69 by July 23. WTI rose from its Q3 low of US$69.6 (July 6) to US$93.08 on July 23.

Prices then slid as optimism over diplomacy built. By August 4, Brent was down to US$79.36 and WT to US$77.33.

During an August 5 interview with the Investing News Network (INN) Kojo Orgle of ICIS said sentiment, not supply, was behind the sell-off.

"Supplies are still extremely tight, but the cautious optimism of a deal coming soon is causing the market to, in our opinion, oversell," he said. He noted that only five vessels had transited the strait the previous day, compared with about 130 per day before the war.

Listen to the full interview to hear more from Orgle on the supply risks facing the market.

The market began to rebound in September when Brent broke above US$100 (September 9) again, following escalating attacks on energy infrastructure in the Middle East and Russia, according to the EIA.

Both benchmarks reached Q3 highs on September 15, with Brent 108.61 and WTI at US$107.02. The EIA notes that spot prices for Brent reached as high as US$132 around that time.

Brent ended the quarter at US$97.91 and WTI at US$97.18. A United Nations policy brief released in September said Brent averaged US$101 for the month, up 22 percent since the cease fire broke down in July.

Josef Schachter of the Schachter Energy Report told INN in mid-September that the war accounts for a large share of the current price. "If we didn't have the war, no, it'd probably be in the 70s," he said, putting the war premium at as much as US$30. He does not expect that premium to disappear this year.

Watch the full interview to hear Schacter's stock strategy amid market volatility.

Brent crude has held above the US$99 per barrel threshold since October 1.

Key oil and gas news from Q3

The fragile calm that followed the June memorandum of understanding between the US and Iran ended on July 7, when military strikes resumed. Neither an end to the conflict nor a full reopening of the Strait of Hormuz has been achieved since, according to the UN.

The Red Sea quickly became a second flashpoint. Brent broke above US$100 on July 23 after a reported strike on two Saudi oil tankers, which Yemen's Houthi rebels claimed as part of a declared naval blockade against Saudi Arabia. Schachter later warned that if the group controls access to the Bab el-Mandeb strait, Iran and its proxies would effectively hold "the two most important straits for oil tanker traffic coming out of the Middle East."

Tensions in the Gulf flared again at the end of August. US forces struck Iran's Islamic Revolutionary Guard Corps on Larak Island in the Strait of Hormuz on August 30, and Iran responded with ballistic missiles and drones aimed at US installations in Jordan. Visible commodity traffic through the strait fell to five ships a day that weekend.

In mid-September, the bypass routes that had cushioned the market came under fire. Strikes damaged Saudi Arabia's East-West pipeline, the kingdom's main route around Hormuz, and satellite imagery confirmed heavy damage to at least two pumping stations, according to Reuters. Only four commodity vessels moved through the strait on September 17, compared with a 10-day average of 16.

A McKinsey report published on September 24 warned that those buffers are wearing thin. It found that the Hormuz closure disrupted 14 percent of combined global oil and gas supply at its peak. Bypass pipelines filled 35 percent of the gap, inventory draws 20 percent and demand destruction and flexibility 45 percent.

Emergency stockpiles are shrinking as well. The US Strategic Petroleum Reserve fell to 285.4 million barrels in mid-September, down 119.9 million barrels year-on-year and its lowest level since 1982, Schachter said in a September interview with INN.

In Canada, the period also brought consolidation, as Tamarack Valley Energy (TSX:TVE,OTCPL:TNEYF) and Headwater Exploration (TSX:HWX,OTCPL:CDDRF) agreed to merge to form a Clearwater-focused producer of about 80,000 barrels of oil equivalent per day.

Refiners feel the squeeze

The quarter's biggest pressure point was not crude itself, but the products made from it.

US refineries ran at an average 95 percent utilization in Q3, the most crude processed in a third quarter since 2019, the EIA notes. Distillate and jet fuel crack spreads nearly tripled from a year earlier, and US distillate inventories were 13 percent below their five-year average as of September 25.

Adam Rozencwajg of Goehring & Rozencwajg told INN in early September that consensus forecasts are misreading demand. Global refining throughput has fallen by about 6 million barrels per day as Middle Eastern refineries sit idle, China halts product exports and Russian plants recover from war damage. Because demand models track refinery runs, he said, that drop is being booked as lost demand.

"That to me is not the sign of a very weak demand market. That's the sign of a refining problem, and that I think is exactly what we have," Rozencwajg said.

Watch the full interview above to hear Rozencwajg explain why refineries could be a critical pinch point in the market.

He believes non-OECD refined product inventories may have fallen by as much as 500 million barrels, roughly ten times the IEA's estimate. "It's not nearly as calm as the price would suggest," he said.

The disruption has also spilled into mining.

According to the IEA's Global Critical Minerals Outlook 2026, the Middle East supplies about a quarter of global sulphur, and half of seaborne sulphur trade moves through Hormuz. Tighter supply pushed up sulphuric acid prices, raising costs for copper, lithium, cobalt and nickel producers. In some cases, acid overtook energy as the largest cost component.

US gas prices remain muted as global LNG demand creates export opportunities

US natural gas largely sat out the volatility. Henry Hub prices began the quarter at US$3.22 per million British thermal units (MMBtu),fell to a Q3 low of US$2.64 on August 6 and peaked at US$3.36 on September 24 .Prices closed September at US$3.02 and stood at US$3.27 on October 13.

Orgle explained that most US LNG export capacity is locked into long-term contracts, which limits how much global tightness reaches domestic prices. "Global dynamics do not trickle back into Henry Hub prices right now," he said, during the August interview.

He added that new pipeline takeaway capacity out of the Permian Basin, including the Blackcomb and Hugh Brinson pipelines, is sending more supply toward Henry Hub and putting pressure on prices. Seasonal heating demand should still lift prices over the winter.

The gap with international markets is wide. Schachter pointed to Asian LNG prices of about US$23 per MMBtu,with Bangladesh paying US$28.50 for a spot cargo. He expects US LNG export capacity to grow from about 19 billion cubic feet per day to 30 Bcf/d by the end of the decade.

That gap is drawing attention to North American supply.

Orgle expects Asian buyers that relied on Qatari LNG to diversify, and said the current environment could accelerate investment in US export infrastructure.

Schachter sees the same opportunity for Canada, which exports about 2 Bcf/d through LNG Canada today and could reach 6 to 7 Bcf/d by 2031 or 2032 if projects in the queue go ahead.

Oil and gas outlook for Q4 and beyond

Most experts INN spoke with believe the market is underpricing the risk ahead.

Orgle expects physical tightness to take about nine months to unwind once the conflict ends, lasting into mid-2027, with refinery repairs taking longer. Strategic restocking should also support prices. "I think prices right now are undervalued," he said.

Rozencwajg sees two possible paths: a shortage of refined products in the developing world before the strait reopens, or a surge in demand from refiners and governments rushing to rebuild inventories once it does. "Where do prices go from here? I mean, I suspect higher," he said.

Schachter said his firm's US$80 WTI forecast for 2026 now looks too low,and it is using US$90 for 2027. Longer term, he expects oil to break its 2008 record of US$147 before the end of the decade.

Security of supply is also likely to favour producers outside the Middle East. Schachter noted that the US produced 13.95 million barrels per day of crude in the week before his interview, up 452,000 barrels from a year earlier. Orgle said the US imports about 70 percent of its heavy crude from Canada, and expects those flows to rise while refining margins stay high.

Not every forecast is as bullish. A July outlook from JPMorgan Chase (NYSE:JPM) calls for Brent to average US$80 in Q4 and end 2026 at US$78, though that was issued before September's rally.

Technical analyst Steve Barton told INN on October 5 that WTI appears to be forming a bear flag and could fall toward its 200 day moving average, around US$82 to US$83.

He is bullish on Brent, however.

Watch the full interview with Barton to hear his thoughts on the broader energy sector and where else he sees opportunity.

"WTI looks like it's going down, and Brent looks like it's going up," he said. Barton has been playing the sector through large producers and oilfield service companies rather than the commodity itself.

Over the longer term, McKinsey expects demand to keep growing, with oil consumption potentially reaching nearly 130 million barrels per day by 2035. "The defining question is shifting from 'How quickly will fossil fuels decline?' to 'What will supply the world's growing energy needs?'" the firm said.