The Art of Diplomacy! The Persian Gulf theater—both confrontation and negotiation—are scripted performances driving oil price volatility! Analyzing the inevitability of U.S.-Iran rapprochement amid the energy crisis and the U.S. midterm elections

a. With the onset of the Northern Hemisphere’s summer travel season, global crude oil demand is set to rise by 1.8 million barrels per day (bpd), reaching its peak for the year; b. The supply shortfall caused by the closure of the Strait of Hormuz continues to widen, exceeding 2 million bpd; c. Global commercial crude oil inventories have declined for 12 consecutive weeks, falling to their lowest level in five years for this time of year. Fitch Ratings’ June 8, 2026, outlook for the oil & gas industry explicitly forecasts: if the Strait of Hormuz remains closed through July, Brent crude prices will surge to $100–$110 per barrel during the summer peak-demand period. 3. The inflation rebound triggered by soaring oil prices is a fatal poison for Trump’s midterm elections. Oil prices have never been merely an economic issue—they directly shape American voters’ electoral choices. According to the U.S. Bureau of Labor Statistics’ May 2026 CPI data: energy prices accounted for 30% of that month’s CPI increase; every 10% rise in oil prices lifts overall U.S. CPI by 0.3 percentage points, directly disrupting the Federal Reserve’s rate-cut timeline. Even more critical is voter sentiment: A Pew Research Center election poll released in June 2026 shows: a. 72% of U.S. voters attribute the current oil price surge to the Trump administration’s Middle East policy; b. In Republican-leaning agricultural states, support for Trump has dropped by 8 percentage points due to rising fertilizer and transportation costs; c. Among working-class voters in the three pivotal swing states—Michigan, Pennsylvania, and Wisconsin—dissatisfaction with high fuel prices reaches 78%; votes from these states will decisively determine the midterm election outcome. For Trump, sustained confrontation—and the resulting high oil prices—amounts to handing votes directly to the Democrats: alienating his core base while losing support in swing states—a thoroughly unprofitable proposition. This is the fundamental reason he must resolve the conflict by late August. III. Corroborating Evidence: Escalating conflict fails to lift oil prices—markets have already priced in ‘reconciliation expectations’ The most telling signal today is oil’s anomalous price movement: on June 8, after the Lebanon-Israel ceasefire agreement formally collapsed and large-scale hostilities resumed, Brent crude rose only 1.88%, then quickly retreated below $90—sharply contrasting with the 12% weekly surge seen at the outbreak of the Red Sea crisis in late 2025. 1. This anomaly reflects global capital’s recognition of the ‘conflict-as-facade, negotiation-as-reality’ dynamic. Commodity markets are the most honest voting mechanism: had investors truly believed full-scale war was imminent, oil prices would have surged over 10% within 24 hours—leaving no time for retail traders to react. Today’s price decline—not rise—signals consensus among major institutional investors: a. The conflict will not escalate into all-out war; the Strait of Hormuz will not be fully sealed; b. Trump will push for negotiations before late August, causing geopolitical risk premiums to gradually dissipate; c. After the summer peak-demand season, oil prices will retreat to the $80-per-barrel range. Zhuo Chuang Information’s June 8, 2026, Crude Oil Market Monitoring Report corroborates this: long-position holdings in the crude oil market have declined for three consecutive weeks, as institutional funds steadily exit ‘war-risk premium’ trades and instead bet on post-de-escalation price declines.

Baili Hao Evening Market Analysis: U.S.-Iran Talks Emerge—Crude Oil Retreats from Highs

Baili Hao Evening Market Analysis: U.S.-Iran Talks Emerge—Crude Oil Retreats from Highs On the morning of September 21, Minneapolis Fed President Neel Kashkari stated in an interview that inflation remains elevated, and the pressure it exerts exceeds even that generated by the Iran conflict’s impact on oil prices. For American citizens, the effects of inflation are felt across all sectors of the economy—not just at the pump. #FederalReserve #FedRateHikes #USInflation #OilPrices #MiddleEastSituation Gold: On the morning of September 21, Minneapolis Fed President Neel Kashkari stated in an interview that inflation remains elevated, and the pressure it exerts exceeds even that generated by the Iran conflict’s impact on oil prices. For American citizens, the effects of inflation are felt across all sectors of the economy—not just at the pump. His remarks conveyed a relatively hawkish stance, indicating one more interest-rate hike remains likely. His comments exerted limited influence on gold markets, as he is widely known as a hawk and his hawkish statements were already anticipated by the market. Baili Hao’s exclusive investment strategist, Mr. Mai Dong of Zhisheng Research, notes that markets are currently focused both on the potential October rate hike and on escalating tensions in the U.S.-Iran conflict. Technical analysis: Last week closed with a bullish candle. On the daily chart, the downtrend has ended. On the 1-hour chart, price is trading above both the 60- and 120-day moving averages—but the 120-day MA is flattening, suggesting possible upward consolidation. Today’s key support lies at $4,330; resistance is at $4,410. Crude Oil: On September 20 local time, a spokesperson for Qatar’s Ministry of Foreign Affairs stated that Qatar is maintaining communication with both the United States and Iran to facilitate the resumption of U.S.-Iran negotiations. Several U.S. government officials confirmed that Washington seeks an agreement to end the conflict. Over recent weeks, Qatar has been exchanging views with both the U.S. and Iran, striving to bridge differences. No official timetable for resuming negotiations has yet been announced. Nevertheless, prospects for de-escalation in U.S.-Iran relations are emerging, and markets have gradually begun pricing in reconciliation expectations. Amid growing anticipation of U.S.-Iran talks, oil prices opened lower. Technical analysis: Last week closed with a bearish candle. On the daily chart, oil prices broke below the $100-per-barrel threshold and continue trading below it. On the 1-hour chart, price has broken below both the 60- and 120-day moving averages and remains below them, confirming continuation of the downtrend.

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Oil prices gained ground as markets anticipated US-Iran diplomatic talks, amid ongoing Middle East tensions affecting Saudi Aramco exports and Libyan production levels.

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