Oil price breaking through resistance levels sends a new signal: the market is pricing in a "protracted battle," with US oil hitting a 20-month high.

As investors continue to digest the prolonged conflicts in the Middle East, US crude oil futures prices soared to their highest level in 20 months. On Thursday, WTI crude oil futures prices surged by 8.5%, settling near $81 per barrel, marking the highest record since July 2024. At the same time, global benchmark Brent crude oil futures prices also closed above $85 per barrel. The Trump administration said it is weighing multiple responses to alleviate the pressure of soaring oil prices triggered by military actions in Iran, leading to a slight fall in crude oil prices in after-hours trading. Possible measures include releasing crude oil from the US strategic petroleum reserve, as well as directly purchasing crude oil futures contracts by the US Treasury Department. Earlier that day, China had requested major refining companies to suspend exports of diesel and gasoline. This move indicates China's priority in safeguarding domestic energy supply, which may have an impact on international consumers. Meanwhile, Japanese refining companies have requested the government to release strategic petroleum reserves. On the other hand, Kuwait has reduced processing rates at its three refineries. Arab countries in the Middle East and Israel have reported intercepting missiles and drones from Iran until Thursday. Qatar has advised residents to stay at home to avoid going out. Iran claimed to have attacked an oil tanker in the Persian Gulf, highlighting the serious risks to maritime security in this energy-rich region. Senior market analyst Priyanka Sachdeva of Phillip Nova Pte brokerage firm pointed out, "If there are further successful attacks on oil tankers or infrastructure, or if there are continued supply disruptions, oil prices may skyrocket again." The core concern of the market remains focused on the Strait of Hormuz, through which approximately 20% of global oil supply needs to pass. Although Iranian military commander Amir Heydari said, "We do not think at all" of closing the strait, the passage is effectively blocked - with hardly any shipowners willing to take the risk of navigating through, even though London insurance companies claim they can provide insurance coverage. This has led to a backlog in crude oil supply, forcing some producers to halt production. The United States has proposed a plan to break the deadlock in the Strait of Hormuz (a key waterway connecting the Gulf and the Indian Ocean), aiming to provide insurance guarantees for passing ships, and possibly dispatching naval escorts. However, traders are generally skeptical of this plan. Compared to Brent crude oil, US crude oil futures prices have risen more rapidly, as the market is concerned about a prolonged disruption in the Strait of Hormuz, which would increase demand for WTI crude oil believed to be less affected by the bottleneck in the Gulf. Additionally, rising freight costs, seasonal refinery maintenance leading to a tightening of domestic supply in the US, have also supported US crude oil prices. This market dynamic is also reflected in the spot price spread of the two major benchmark oils (i.e., the price difference between the nearest two-month contracts). In just over a week, the spot price spread for Brent crude oil has expanded by nearly $4 per barrel, while the corresponding spread for WTI has only increased by about $2 per barrel, underscoring a more severe short-term supply tightness in the North Sea market. This conflict has not only pushed up prices of crude oil, natural gas, and refined products, raising transportation costs, but it has also brought increasingly widespread impacts to producers and importing countries that rely on energy supplies from the region, reigniting concerns about inflation. Ship tracking data compiled shows that traffic through the Strait of Hormuz has plummeted by over 95%, with major oil tankers and liquefied natural gas carriers choosing to avoid this route. The few remaining ships still navigating have turned off their transponders when leaving the Gulf, a common practice in conflict zones. According to data from the International Energy Agency (IEA), a Paris-based agency providing advice to major economies, approximately 15 million barrels of oil and an additional 5 million barrels of refined products are transported through the Strait of Hormuz daily by 2025. In a study report published on its website, the IEA warned, "The sheer scale of oil exports passing through the Strait of Hormuz and the lack of alternative transportation routes means that any disruption affecting passage through the strait would have extremely serious consequences." The fuel market has already felt the impact of the conflict. In the UK, a major heating oil retailer stated that, following a surge in demand, the company is managing rationed supplies to ensure fair distribution. Since the outbreak of the conflict, the benchmark diesel price in Europe has risen by over 40%.