The renewed U.S.-Iran conflict and the further rise in international oil prices

It is certain that, as the new round of conflict between the United States and Iran continues and escalates, the U.S. will further intensify its sanctions against Iran. However, just as the ceasefire memorandum of understanding signed on June 17, 2026, demonstrated, if U.S.-Iran relations ease in the future, the U.S. will undoubtedly relax its sanctions on Iran as part of a quid pro quo. Sanctions—past, present, and future—remain a key instrument of U.S. foreign policy, and U.S. policy toward Iran will follow this pattern. International oil prices have reversed their downward trend and risen again above the $80-per-barrel level. As a major global producer and exporter of oil and gas—and as a critical chokepoint for international energy trade—the war among the U.S., Israel, and Iran, coupled with the closure of the Strait of Hormuz, inevitably severely disrupts global oil and energy markets, triggering substantial volatility in international oil prices. The state of the international oil market in 2026 vividly illustrates this point: long-standing scenario analyses regarding the impact of a Strait of Hormuz closure have become reality in the first half of 2026. In the first half of 2026, spurred by the U.S.-Israel-Iran war, international oil prices experienced a pronounced roller-coaster pattern. On March 31, Brent crude futures closed at $118.35 per barrel—the highest closing price recorded in 2026 to date. By June 30, Brent crude futures settled at $72.92 per barrel, nearly matching the pre-war closing price of $72.48 per barrel on February 27—the last trading day before the outbreak of hostilities—effectively erasing the war-induced price surge. Driven by positive developments—including the U.S.-Iran ceasefire memorandum of understanding and the gradual resumption of navigation through the Strait of Hormuz—international oil prices continued falling in early July 2026. On July 1, Brent crude futures closed at $71.57 per barrel—below the pre-war level of February 27. From July 1 to July 7—the four trading days preceding the re-ignition of hostilities between the U.S. and Iran—Brent crude futures fluctuated around $72 per barrel, while WTI futures closed entirely below $70 per barrel. Oman crude—the benchmark crude for the Middle East—also traded below $70 per barrel, with prices falling below $65 per barrel on three of those days. On July 7, 2026, hostilities between the U.S. and Iran reignited, causing international oil prices to reverse their downward trend and surge once again above $80 per barrel. On July 13, Brent crude futures closed at $83.30 per barrel; on July 14 and 15, they approached $85 per barrel. On July 15, WTI futures closed at $79.63 per barrel—approaching the $80-per-barrel threshold—while Oman crude closed at $82.17 per barrel on July 14. The outlook for the international oil market in the second half of 2026 hinges primarily on how the renewed U.S.-Iran conflict evolves. Should the war escalate further and spill over into other major oil-producing and exporting countries in the Middle East—and should oil and gas shipments through the Strait of Hormuz be fully disrupted once again—international oil prices could potentially surge back above $100 per barrel, possibly even exceeding the March 31, 2026, Brent crude futures high of $118.35 per barrel.

This round of oil price increase discussion

From a professional perspective, the rapid rise in international oil prices in this round stems fundamentally from heightened expectations of supply-side disruptions, triggering a swift increase in risk premium. The price breakthrough above $105 per barrel was driven primarily by two factors. First, escalating geopolitical risks in the Middle East—particularly concerns over potential disruption to oil transportation through the Strait of Hormuz, a globally vital energy shipping corridor—have raised market fears of reduced crude supply. Shipping data show a recent decline in the number of tankers transiting the region, indicating that market concerns about supply-chain security are not purely emotional but grounded in tangible realities. Second, hurricanes impacting the U.S. Gulf of Mexico have forced temporary shutdowns at some offshore oil production facilities, strengthening short-term expectations of supply contraction. However, the swift price correction following the peak reflects that market trading involves not only fundamentals but also substantial sentiment-driven elements. After the U.S. signaled a pause in military escalation, market expectations of extreme supply disruptions eased significantly, causing a rapid unwinding of part of the embedded risk premium. Put simply, the market had previously priced in worst-case scenarios—essentially adding a 'war insurance' premium to oil prices—and when the perceived risk receded, that portion of the price was naturally released. From a trading standpoint, assessing commodity price trends requires looking beyond headlines and focusing instead on real data. What truly determines oil’s long-term price trajectory is actual supply change—for example, the daily volume of vessels actually transiting the Strait of Hormuz, the speed at which affected oilfields resume operations, and shifts in global crude inventories. In contrast, military rhetoric, political statements, and market speculation about extreme outcomes mainly drive short-term sentiment fluctuations. This is a classic case of 'expectation-based trading' in commodity markets. Short-term prices reflect investors’ forward-looking assessments of future supply-demand dynamics—not current, realized supply-demand imbalances. This round of oil price increase can thus be understood as the combined result of 'genuine supply disruption + panic-driven sentiment premium.' Once sentiment cools, the inflated component is rapidly squeezed out—but the underlying supply pressure does not vanish instantly just because of a conciliatory statement.

Oil price rises above $115 a barrel amid fears US will renew strikes on Iran

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Brent crude oil surged past $115 per barrel, marking a five-month high, as geopolitical tensions in the Middle East raise fears of supply disruptions from potential US strikes on Iran.

theguardian

Oil price rises above $115 a barrel amid fears US will renew strikes on Iran

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