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Iran Conflict 2026
3JUN

Brent at $112 as Houthis join the war

2 min read
09:04UTC

The IEA's largest-ever emergency oil release has not stabilised prices; a Dow executive warned supply chains will take nine months to recover after the strait reopens.

← Back to Washington signs a sanction, not a strikeJump to analysis ↓
ConflictDeveloping
Key takeaway

Nine months of supply chain damage is locked in regardless of when the war ends.

Brent Crude closed at $112.57 on 28 March, up 4.22% on the day. Pre-war Brent was $67.41; the current price represents a 67% increase in 29 days. The Houthi entry and Iran's firm rejection of negotiations drove the reversal. 1

The IEA's record 400 million barrel emergency release, the largest in the agency's 50-year history, has not stabilised prices. The IEA itself said why: "The most important factor is resumption of regular transit through the strait of Hormuz." 2 European reserves are predominantly industry-held: 74.8 million barrels from industry versus 32.7 million from government, giving European governments less direct control than the headline figure implies.

Dow CEO Jim Fitterling stated the damage is already locked in: even if Hormuz reopens tomorrow, petrochemical supply chains will take 250-275 days to unwind. The US-Asia petrochemical pricing gap has surged from under $500 to over $1,200 per metric tonne. 3 US farmers face a 2 million tonne urea shortfall during spring planting, with urea prices up 49% to $720 per tonne. Corn and wheat yields on affected fields could fall 10-20%, with downstream effects on global grain prices by autumn.

Deep Analysis

In plain English

Oil prices closed at $112.57 per barrel on 28 March, up about 4% on the day. Before the war started, a barrel cost $67.41. The 67% rise in 29 days is one of the fastest sustained oil price increases in modern history. The IEA, a group of oil-consuming countries, released the largest emergency oil reserve in its history: 400 million barrels. It has not reduced prices. The IEA itself said why: reserves cover a temporary supply disruption; they cannot substitute for a closed shipping route. For a British driver, $112 oil means roughly £1.80 per litre at the pump. For farmers, fertiliser is the bigger problem. Urea, the chemical used to grow corn and wheat, has risen 49% in price and the US faces a 2 million tonne shortage this spring planting season. Crop yields could fall 10-20%, and those effects will reach food prices by autumn.

What could happen next?
  • Consequence

    A ceasefire today does not end the economic damage: Dow's 250-275 day supply chain unwind means petrochemical-driven inflation persists into Q1 2027 regardless of conflict resolution.

  • Risk

    The 2 million tonne urea shortfall is not substitutable within a planting season; US crop yields in autumn 2026 are already compromised regardless of war outcome.

Sources:Fortune·IAEA / CBS News·IAEA / CBS News
Mentions:Strait of Hormuz →Iran →Byron Callan →
First Reported In

Update #50 · Houthis join; Iran holds two chokepoints

Fortune· 28 Mar 2026
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Causes and effects
Caused by
War leaves US farms 2m tonnes short
The urea shortfall and Brent surge are direct economic consequences of the Hormuz disruption and Houthi entry compounding energy market pressure.
Occurred 27 Mar 2026
Read story →
This Event
Brent at $112 as Houthis join the war
The economic damage is already locked in regardless of when the war ends; the petrochemical and fertiliser shocks will outlast any ceasefire by months.
Led to
Brent at $112 as Houthis enter the war
Brent's 4.22% surge to $112.57 reflects the compounding economic impact of Houthi entry into the conflict adding demand-side uncertainty.
Occurred 28 Mar 2026
Read story →
Different Perspectives
Oil markets and Lloyd's of London
Oil markets and Lloyd's of London
Brent fell to $89.25 on ceasefire probability, not new barrels, with traders voting for Trump's deed over Tehran's denial. Lloyd's has not repriced Hormuz war-risk cover because its trigger requires a UN Security Council resolution or government certification, so tanker insurance costs remain elevated regardless of the spot move.
Pakistan and Qatar mediators
Pakistan and Qatar mediators
Pakistan's Mohsin Naqvi was in Tehran for his second visit in under a week, using the Pakistan-Qatar channel that delivered April's ceasefire after an identical public-denial cycle. The channel carries both civilian and military buy-in from Islamabad, the only configuration Iran's split command cannot dismiss as a partial signal.
India
India
India summoned the US Deputy Chief of Mission after three Indian sailors were killed aboard MT Settebello, the first formal grievance from a major non-belligerent directed at US enforcement. Indian seafarers supply roughly 12 per cent of the global maritime workforce; their presence on third-flag Gulf tankers is structurally inevitable regardless of bilateral diplomacy.
Islamic Revolutionary Guard Corps (IRGC)
Islamic Revolutionary Guard Corps (IRGC)
The IRGC declared Hormuz closed on 11 June while civilian negotiators were on the same mediation channel, then issued no public comment on the MoU framework. Its silence on the framework, rather than any foreign ministry statement, is the operative approval signal; the corps' unilateral Hormuz closure shows it did not treat the diplomatic track as binding on its operations.
Iran foreign ministry (Baghaei)
Iran foreign ministry (Baghaei)
Esmail Baghaei told IRNA that reports of a finalised deal were 'merely speculation' and that Iran had 'not yet made a final decision'. The denial is structurally identical to Iranian foreign ministry statements during the April ceasefire talks, which produced a binding text within 48 hours of the same language.
Trump administration / CENTCOM
Trump administration / CENTCOM
Trump cancelled the third strike day and called the MoU 'very strong' and almost ready to sign, while CENTCOM kept tanker enforcement running in the same 24-hour window. The administration is simultaneously withdrawing the military pressure it claims drove the deal and sustaining the enforcement campaign it is trying to trade away.