July 14th News
On Monday, July 13, spurred by news that the U.S. military is set to blockade Iran's coastal ports nationwide, international crude oil futures experienced a rare, one-sided surge this year. Both WTI and Brent—the two benchmark crude oils—saw their daily price increases exceed 9%, reaching new highs for the current period.
I. Market Trends: A sharp, across-the-board rally—with crude oil and refined oil products both posting substantial gains.
At the close of the New York session, NYMEX August WTI crude oil futures surged by $6.73, representing a price increase of 9.42%. The settlement price reached $78.14 per barrel, marking the largest single-day price increase since April 29 and the highest price level since June 15. Meanwhile, ICE September Brent crude oil rose by $7.29, with a price increase of 9.59%. The settlement price stood at $83.30 per barrel, recording the largest single-day dollar price increase since April 2 and hitting a new high since June 12.
Finished oil prices rose in tandem, fully reflecting the anticipated rise in energy costs: In August, RBOB gasoline futures surged by 18.17 cents, representing a price increase of 6.09%, with the settlement price reaching $3.1663 per gallon; heating oil prices jumped by as much as 7.61%, closing at $3.8236 per gallon. Across all energy derivatives, pricing collectively reflects heightened risks related to Middle East supply disruptions.
II. Core Upside Logic: U.S. Military Blockade of Iranian Ports Combined with a Sudden Drop in Strait Shipping, Leading to a Concentrated Release of Supply Panic
The immediate cause of this sharp surge in oil prices is the U.S. official announcement of a full-scale maritime blockade of Iran's entire coastline, with multiple geopolitical headwinds converging to amplify market concerns.
U.S. forces impose a comprehensive maritime blockade, virtually cutting off Iran’s crude oil export channels.
On July 13, local time, the U.S. Navy Joint Maritime Information Center issued a notice stating that, starting at 20:00 GMT on July 14 (4:00 a.m. Beijing time on July 15), all Iranian ports and coastal areas would be sealed off. The blockade would apply to vessels of all nations, allowing only humanitarian supplies and neutral ships in transit to pass through, subject to mandatory inspections. Coupled with Trump’s announcement that a 20% transit fee would be imposed on cargo shipments through the Strait of Hormuz, this dual policy has directly driven up the logistical costs and navigational risks associated with exporting crude oil from the Persian Gulf.
The blockade will directly cut off Iran’s sea routes for exporting crude oil and refined petroleum products. Previously, the U.S. had already canceled exemptions for Iranian oil sales. Combined with this maritime blockade, Iran’s crude oil exports have essentially come to a standstill, leading to a passive contraction in global crude oil supply and circulation. Meanwhile, Iranian authorities have simultaneously issued a warning about the dangers of navigating the southern shipping lanes, further intensifying shippers’ risk-averse sentiment.
Oil tanker traffic through the Strait of Hormuz plunges sharply, putting global energy chokepoints under pressure.
Shipping data show that, following the escalation of U.S.-Iran tensions, the number of tankers passing through the Strait of Hormuz on a single day has fallen to its lowest level in two months. Shipping traffic, which had briefly rebounded during the brief ceasefire in June, is now rapidly contracting. Traders are proactively avoiding the Persian Gulf route, leading to an increase in ships rerouting and delays in cargo shipments.
Hormuz Strait handles nearly one-third of the world’s seaborne crude oil exports and a substantial portion of LNG shipments. A decline in channel throughput efficiency directly tightens the short-term supply available. Analysts point out that even if transit vessels are allowed to pass through, stringent inspection procedures will prolong turnaround times, effectively reducing the total monthly volume of crude oil circulation. In the long term, the market has begun anticipating that global refining companies will accelerate their efforts to develop alternative transportation routes bypassing the strait, making it increasingly difficult to close the short-term supply gap.
Iranian crude oil purchases are hampered, prompting the market to turn to higher-priced alternative sources and driving up benchmark oil prices.
Under the dual constraints of sanctions and blockades, independent refiners have reduced their purchases of Iranian crude oil and are turning instead to crude oil from Iraq, the United Arab Emirates, and Qatar. Abu Dhabi National Oil Company lowered the official selling price of its Murban crude oil for August to $80.01 per barrel. However, the increase in alternative supply sources is limited, making it difficult to fully offset the reduction in Iranian crude oil exports, and the supply-demand gap is expected to continue widening. According to an analysis by Gelber & Associates, with a sharp decline in Strait of Hormuz traffic and ongoing retaliatory attacks, market concerns about short-term disruptions to crude oil supplies have risen across the board.
III. Fundamental Support: U.S. total inventory has fallen to multi-decade lows, exhausting the market’s buffer capacity.
Geopolitical risks can rapidly drive up oil prices, primarily due to the continuous and significant reduction in U.S. crude oil inventories. The lack of reserve inventory to buffer sudden supply shocks has left the market's safety cushion extremely thin.
Strategic petroleum reserves have fallen to a 43-year low, with continuous large-scale releases depleting the adjustment space.
According to data from the U.S. Department of Energy, the U.S. Strategic Petroleum Reserve fell by another 3 million barrels last week, bringing total inventories down to just 316.5 million barrels—the lowest level since April 1983. Since the conflict erupted at the end of February through July 10, the SPR has cumulatively declined by 98.9 million barrels, as the U.S. continues to implement its large-scale release plan totaling 172 million barrels. As a result, the strategic reserve’s ability to stabilize oil prices has significantly diminished. Should a substantial and widespread disruption in supply occur in the Middle East, the U.S., lacking sufficient reserves to offset the shortfall, will have no choice but to rely on price hikes to curb terminal demand.
U.S. crude oil inventories hit a 42-year low, and the supply-demand structure remains persistently tight.
Including both commercial inventories and strategic reserves, U.S. crude oil stocks have fallen to 730.8 million barrels—a level not seen since 1984. Preliminary market surveys indicate that, as of the week ending July 10, U.S. crude oil inventories continued their downward trend, with an expected decrease of 2.7 million barrels. Gasoline and distillate fuel inventories may show a slight increase in stock levels, but this reflects only short-term fluctuations in refinery operating rates and does not alter the overall low-inventory situation in the medium to long term. The market is now eagerly awaiting this week’s official inventory data from the API and EIA to confirm the strength of supply and demand.
4. Outlook for the Future Market
In the short term, crude oil analysts believe that the actual implementation intensity of the maritime blockade needs to be observed, including changes in the data of oil tankers docking and departing from Iranian ports, as well as the inspection duration and passage efficiency of ships transiting the strait. If a large number of ships are forced to take detours or are stranded, the geopolitical premium on oil prices will further increase. Additionally, whether the conflict between the United States and Iran escalates again: the biggest upside risk is whether Iran takes countermeasures to disrupt shipping in the strait. If Iran implements restrictions on the waterway and the conflict expands, oil prices will surge again.
In the medium term, the current oil market is in a dual bullish environment of low inventory and high geopolitical risks, with the central oil price having significantly increased. Considering the current tight supply and demand situation and the increasing difficulty of returning to the negotiating table, oil prices may remain at relatively high levels in the medium to long term. Before the maritime standoff between the United States and Iran eases, oil prices are more likely to rise than fall, and the high and volatile market conditions will continue.
