Middle East conflict restarts, traders say "all cushions have been burned out," the oil market is on the brink of collapse.

The flames of war between the US and Iran have reignited, and the situation in the Strait of Hormuz has once again become urgent. This time, the global oil market has no way out. Brent crude oil futures have risen by over 10% this week, exceeding $87 per barrel at one point, reaching a new high in over a month. According to Xinhua News Agency, the Trump administration has notified Israel of increasing air power in the region, hinting that US military may expand strikes against Iran as early as this weekend. Meanwhile, the US military has launched airstrikes against Iran for the eighth consecutive night, with Iranian Supreme Leader Ayatollah Ali Khamenei emphasizing that Iran will leave the US with a "deeply memorable lesson" and Iranian Deputy Foreign Minister Abbas Garibabadi announcing the termination of the Iran-US Understanding Memorandum. Several energy traders have warned that the supply shortages caused by this conflict will be far more severe than the previous round - the strategic reserves and commercial stocks that were used to cushion supply shocks have been nearly depleted during the previous crisis. "We have exhausted all cushioning pads, all of them. Everything has now disappeared," one trader candidly stated. Military escalation continues with no signs of compromise from either side. According to Xinhua News Agency, the US Central Command announced that the US military launched a new round of airstrikes against Iran at 6:00 pm Eastern Time on the 18th, aiming to "further weaken Iran's ability to threaten shipping in the Strait of Hormuz and swiftly punish the Islamic Revolutionary Guard Corps for attacking the Jordanian US military base." According to CCTV news, two US soldiers were killed on the 17th in Jordan by Iranian ballistic missiles and drones, one is missing, and four others were injured and sent for medical treatment. Since the end of February, the US and Israel have launched large-scale military operations against Iran, and the number of US military deaths has risen to 16, with over 400 injured. According to CCTV news citing US officials, Iran has carried out four attacks on a US military base in Jordan over the past five days, causing damage to multiple Black Hawk helicopters. US officials believe that this indicates that the Iranian military still has sufficient missile inventory and has improved its ability to evade US air defense systems. The Iranian Revolutionary Guard claimed to have destroyed at least two fighters and three other aircraft at the Muwaffaq Salti Air Base. According to Xinhua News Agency, Iranian Supreme Leader Ayatollah Ali Khamenei issued a statement saying that the US repeatedly violated the Iran-US Understanding Memorandum, proving that the US President's signature is "worthless and ineffective," and emphasized that the US attempt to provoke a war "will pay a heavier price." Iranian Deputy Foreign Minister Abbas Garibabadi stated that Iran has ceased to adhere to the understanding memorandum, and "if Americans are wise, they should choose another solution." The Strait of Hormuz is nearly paralyzed, and shipping data is rapidly deteriorating. UBS analyst Henri Patricot pointed out in his daily "Hormuz Tracking" report that the situation in the strait has further escalated, with the number of oil and gas tankers passing through dropping sharply to only 1 ship. The average daily transit volume since July has been around 10 ships, significantly lower than the over ten ships in late June and early July, and far below the level of around 50 ships in February. In terms of cargo volume, the average outbound volume in July is about 5.4 million barrels of oil equivalent per day, compared to 3.7 million barrels of oil equivalent per day in June and 1.3 million barrels of oil equivalent per day in May. Crude loading from Gulf ports (excluding Iran) plummeted to 1.0 million barrels per day on Wednesday, down from 6.0 million barrels per day the previous day, with an average of 3.2 million barrels per day over the past week, below the July average of 5.1 million barrels per day. The report also pointed out that the loading volume at ports outside the Strait of Hormuz, such as Yanbu in Saudi Arabia and Fujairah in the UAE, has also slightly declined in recent times. Patricot believes that with the US and Iran escalating tensions, the path to normalizing traffic in the Strait of Hormuz has been disrupted, "any sustained reopening has been postponed." Buffer reserves depleted, supply crisis at a dead end The International Energy Agency (IEA) revealed on Friday that member countries have released about three-quarters of the 400 million barrels of emergency reserves announced in March, meaning that this buffer source is now only a few weeks' supply. Energy Aspects founder Amrita Sen pointed out that before the US-Iran conflict, the global oil market had about 400 million barrels of surplus inventory, excluding government strategic reserves. "And now we have almost nothing... the market's complacency about Hormuz traffic is being severely tested." Bloomberg data shows that the fuel market is significantly tightening, with ICE diesel cracking spreads at record highs and Nymex heating oil cracking spreads at their strongest since March. The Financial Times cited energy traders warning that during the previous crisis, Western countries released record strategic reserves, China reduced oil imports and used national enterprise inventories, keeping Brent crude oil prices controlled at a peak of $126 per barrel, far from historical highs. But now, as the new shock approaches, there are very few tools available. Natixis bank analyst Joel Hancock wrote in a report, "Ultimately, the market's previous pricing expectations were based on an optimistic flow trajectory, a trajectory that is now clearly not an option, at least until the new round of diplomatic efforts arrives." The refined oil market is also under pressure, with consumers feeling the impact. In addition to crude oil, the refined oil market is also under significant pressure. Since the outbreak of the US-Iran conflict, European wholesale diesel futures have risen by 14% this week, with retail gasoline and diesel prices rising quickly and falling slowly, with consumers feeling the impact of oil price increases. The IEA warned on Friday of potential supply shortages in the gasoline and diesel markets. In addition, after Russia's refining system was hit by drones in Ukraine, diesel exports were damaged, further shrinking global diesel supplies. Countries like Turkey and Brazil, which had previously purchased Russian diesel, are now forced to compete with Western countries for alternative supplies. This article is reprinted from "Wall Street News". Editor: Jiang Yuanhua.