Brent crude surged more than 50% in March 2026, marking the largest monthly gain since the contract's inception in 1988. The rally, driven by the near-total shutdown of the Strait of Hormuz following the US-Israel military campaign against Iran, has sent shockwaves through forex markets and forced traders to reassess positions across oil-linked currency pairs.
What Happened
Brent crude closed at approximately $110.69 per barrel on 31 March, up from $73.61 at the start of the month — a gain exceeding 50%. WTI settled above $102, its first close above the $100 mark since July 2022.
The trigger: the Strait of Hormuz, which typically handles roughly one-fifth of global oil flows, has been effectively shut since late February. The International Energy Agency has called this the largest supply disruption on record, with an estimated 15 million barrels of crude and 5 million barrels of refined products removed from daily global supply.
Dubai crude — which tracks physical Middle East delivery — surged 76% to $126, reflecting the acute physical tightness in the market.
Timeline of the March Oil Shock
- 28 February — US and Israel launched joint strikes on Iran, including the killing of Supreme Leader Ali Khamenei.
- Early March — Iran's IRGC warned all vessels against passage through the Strait of Hormuz. Tanker traffic ground to a halt.
- 12 March — Iran confirmed the strait would remain shut. Oil prices broke through $100.
- 19 March — Dubai crude hit $166, a record. US gas prices eclipsed $4 per gallon.
- 20 March — Trump administration issued General License U, a one-month authorisation for the sale of 140 million barrels of sanctioned Iranian crude at sea — an attempt to cool prices.
- 25 March — Tehran rejected the US 15-point ceasefire plan. Safe-haven flows into USD accelerated.
- 30 March — WTI settled above $100 for the first time since 2022. Reports emerged that Trump told aides he may end the war without reopening Hormuz.
- 31 March — Brent closed the month with a 50%+ gain, the largest on record.
What This Means for Forex Traders
The oil shock has reshaped the forex landscape. Here are the key dynamics to watch.
USD strengthening on safe-haven flows. The US dollar finished March as the best-performing major currency alongside the Japanese yen. Rising Treasury yields and geopolitical risk have pulled capital into dollar-denominated assets.
CAD under pressure despite oil rally. Normally, surging oil benefits the Canadian dollar. But this crisis is different — the supply disruption is concentrated in the Middle East, not benefiting Canadian producers proportionally. USD/CAD has remained elevated as USD safe-haven demand overwhelms the oil-CAD correlation.
NOK and commodity currencies mixed. Norway's krone has seen some support from higher energy prices, but broader risk-off sentiment has limited gains. AUD and NZD have weakened on global growth fears.
JPY bid on risk aversion. Japan imports virtually all its oil, so higher crude is a drag on its economy. Yet the yen has strengthened on pure safe-haven demand, illustrating how extreme the current risk environment has become.
EUR under pressure. The eurozone is heavily dependent on energy imports. Higher oil prices feed directly into inflation and weigh on growth prospects, keeping the euro on the back foot.
The Fed Factor
The Federal Reserve held rates at 3.50-3.75% at its March meeting and raised its headline PCE inflation forecast from 2.4% to 2.7%. Chair Powell stated that the oil-driven inflation spike is likely temporary and that rate hikes would not address supply-side energy shocks.
Markets are now pricing at most one rate cut in 2026, down from earlier expectations of two or three. Powell's message: the Fed will wait and watch, not react.
What Comes Next
Two scenarios dominate the outlook.
Scenario 1: Hormuz reopens. If a ceasefire deal materialises and tanker traffic resumes, oil could retrace sharply. Brent falling below $80 would ease inflationary pressures and likely weaken the dollar against risk-sensitive currencies.
Scenario 2: Hormuz stays shut. Trump has signalled willingness to end the war with the strait still closed. If that happens, oil stays elevated for months. Central banks face a prolonged stagflation risk. USD likely remains strong on safe-haven flows, while energy-importing economies suffer.
For forex traders, the Strait of Hormuz is now the single most important variable in the market. Every headline on Iran negotiations will move currencies.
Final Thoughts
March 2026 will be remembered as a turning point for energy markets. A 50%+ monthly gain in Brent is not a normal event — it reflects a genuine supply crisis with no clear resolution. Forex traders should be positioned for continued volatility, with tight risk management and close attention to geopolitical developments. The old correlations between oil and currency pairs are being tested, and the winners will be those who adapt fastest.