Has the oil market reached a 'turning point'?

The global crude oil market stands at a critical juncture. Accelerating inventory drawdowns, a robust return of Chinese demand, and persistent disruptions to Middle Eastern shipping routes—these multiple factors have collectively pushed oil prices above the USD 100-per-barrel threshold. Energy research firm Energy Aspects has characterized the current market as a 'turning point' and warned that prices are entering an 'upward spiral'. Amrita Sen, Founder and Head of Market Intelligence at Energy Aspects, stated in a CNBC interview on September 11 that crude oil prices possess further upside potential, with the trend clearly upward. She noted that global crude inventories declined by a staggering 120 million barrels over the past two weeks alone, while China’s crude oil purchases have surged markedly—far exceeding levels seen earlier this spring. According to her prior disclosure to Bloomberg, China’s crude imports in September are expected to reach approximately 10 million barrels per day (bpd), up roughly 3 million bpd from under 7 million bpd in June. Meanwhile, domestic market reactions have also been pronounced. The main contract of Shanghai International Energy Exchange (INE) crude oil futures has climbed above RMB 800 per barrel, and an unusual phenomenon has emerged: domestic crude futures prices have surpassed Brent crude futures prices—indicating that the domestic market is pricing supply tightness more aggressively. In response, China’s regulatory authorities swiftly acted: the Shanghai Futures Exchange (SHFE) issued a notice on September 11, effective from the close of trading on September 14, raising price limit ranges and margin requirements for relevant crude oil and low-sulfur fuel oil futures contracts to strengthen risk management. China’s demand rebound emerges as the core driver behind rising oil prices China is one of the pivotal variables behind this round of oil price increases. In June, China’s crude oil imports stood at under 7 million bpd—prompting market concerns about demand prospects. Yet this situation has reversed sharply in recent weeks. According to Amrita Sen’s Bloomberg briefing, China’s September crude imports are projected to reach around 10 million bpd—approximately 3 million bpd higher than in June, representing a nearly 45% increase. This strong demand rebound, coupled with accelerating global inventory drawdowns, has jointly propelled oil prices upward beyond key thresholds. Shanghai crude futures prices surged significantly during this period, directly reflecting China’s re-entry into the demand market on the futures trading floor. Persistent risks in the Strait of Hormuz keep supply-side pressure unabated Geopolitical risk remains another core pillar supporting current oil prices. Escalating tensions in the Middle East—especially threats to shipping through the Strait of Hormuz—are exerting tangible pressure on crude supplies to Asian refiners. Amrita Sen pointed out that oil flows through the Strait of Hormuz briefly rebounded in August, but as regional tensions flared again, shippers resumed exercising caution. She warned that if cancellations and delays at the Strait persist, Asian refiners will have no choice but to cut refinery runs. According to reports by Shangguan News, Yemen’s Houthi forces and the Saudi-led coalition have engaged in combat across multiple fronts; Saudi Arabia suffered attacks, and the Yemen conflict escalated significantly—serving as the immediate catalyst for this sharp rise in international oil prices. On September 10, NYMEX WTI crude futures surged 6.69% to close at USD 102.48 per barrel; London-traded Brent crude rose 6.34% to close at USD 107.63 per barrel—both hitting their highest levels since May 19 and registering their largest single-day gains in nearly two months.

Oil prices, gas prices, and freight rates are all rising—has the global energy market entered a new phase of heightened tension?

However, the most pessimistic forecasts for oil prices have yet to materialize—largely because Middle Eastern oil producers have found alternative routes to export crude overseas. In most cases, these alternatives involve pipelines delivering crude to ports outside the Strait of Hormuz. For the UAE, it is the pipeline to Fujairah Port—located just outside the Strait; for Iraq, it is the pipeline to Turkey and Mediterranean ports; and for Saudi Arabia, it is the East-West Pipeline, which reverses flow to deliver crude to Yanbu Port on the Red Sea—near areas where Houthi forces operate. The Houthis joined the conflict earlier this year, targeting Saudi vessels and energy infrastructure; the latest attack occurred earlier this week against the Jizan refinery. Other refineries across the Arabian Peninsula have likewise been struck—by Iranian military forces. Although Brent crude has now breached USD 100 per barrel, the key question is whether prices can sustain this level—or even surge substantially higher. The longer the war persists, the less effective any downward price pressure becomes, primarily because the world is drawing down strategic inventories to buffer the price shock—and those inventories are finite. In its latest monthly Oil Market Report, the International Energy Agency (IEA) noted that, as of July, approximately 8.3 million bpd of oil production in the Middle East remained offline. The agency also reported that global oil inventories declined by 69 million barrels in July—following a sustained drawdown trend averaging 2.7 million bpd daily. With ongoing conflict in the Middle East, this drawdown trend is expected to continue, further pushing up oil prices. Many bearish observers frequently emphasize that global oil reserves and production capacity remain ample—meaning any sign of de-escalation, let alone the June ceasefire agreement, would exert downward pressure on prices. Yet over the past several weeks, the trend in international crude benchmarks has been unmistakable: prices have indeed fallen—but the magnitude of declines has steadily diminished. Since September 2025, Brent crude has risen nearly USD 40 per barrel; WTI has gained over USD 30 per barrel—based solely on futures data, while spot market prices are even higher. Some blended crudes—including Murban crude and DME Oman benchmark crude—have already exceeded USD 100 per barrel; OPEC’s basket price has also broken above USD 100, as has India’s crude basket. Now, even Brent futures have crossed this psychologically critical threshold. This does not necessarily signal bearish pressure ahead—particularly in the absence of any news suggesting renewed peace talks between Tehran and Washington. For markets, this is bad news, as oil demand typically rises in the year-end quarter. Of course, higher prices will suppress demand—but such suppression tends to be limited, given oil derivatives’ foundational role in the economy—suggesting prices may climb further and remain elevated. (III) Brent Crude Surges to USD 108 per Barrel Earlier on September 14, Brent crude briefly spiked to USD 108 per barrel before retreating to USD 107.22 following fresh escalation in Middle Eastern tensions; at the time of writing, WTI was trading at USD 102.66 per barrel.

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