On Monday, there was significant volatility in global oil prices. Crude oil saw the largest single-day increase since the Biden administration imposed sanctions on Russia, with prices rising over 3%. Although prices retreated during the Asian session, they surged rapidly starting from the European session, further gaining in the night market. This rise in oil prices was mainly influenced by threats from Trump against Iran, which heightened market tensions significantly.
Trump recently threatened military action against Iran, raising concerns about the further deterioration of U.S.-Iran relations and its potential impact on oil supply. In response, Iran's Supreme Leader Khamenei issued a strong rebuttal, stating that if the U.S. takes any actual action based on Trump's "bombing threat," Iran will retaliate with force. Additionally, the Tehran Times reported that Iran has deployed missiles on all underground launch pads, ready to fire at any moment. This threat has once again heightened market tensions, especially with Iran's missile deployment and recent seizure of transport vessels in critical strategic areas such as the Strait of Hormuz, complicating the situation further.
Though previously it was widely believed that the likelihood of a hot war between the U.S. and Iran was low, the escalating geopolitical tensions are making the market increasingly uneasy. Consequently, oil prices are soaring, particularly for Shanghai crude oil, which is outperforming Western markets, reflecting investors' concerns about the escalation of Middle Eastern tensions.
Apart from Trump's threats against Iran, the market is also closely monitoring Trump's upcoming reciprocal tariff policy announcement. Investors are worried this policy could negatively impact the global economy, thereby affecting oil demand. Although oil prices experienced a pullback in the Asian session, the uncertainty brought by these tariff policies continues to have a profound impact on market sentiment.
Recent oil price trends indicate that Trump's series of sanctions have intensified supply-side tension expectations, which have become the primary drivers of rising oil prices. Meanwhile, OPEC+'s gradual exit from voluntary production cut plans and compensatory cuts by some member countries might also increase supply-side uncertainty. Investors' concerns about the global economic outlook, along with Trump's sanctions on multiple countries, are exacerbating oil price volatility.
The current oil prices have reached new rebound highs and are now testing strong resistance areas, with speculative positioning further intensifying the situation. The market's uncertainty remains high. Future developments will directly influence the scope of oil price increases, with high volatility likely remaining a norm. Investors are advised to exercise caution and implement risk control measures when participating in the market.
