On January 29th, international oil prices continued their upward trend. WTI crude oil rose nearly 1.8% to $63.5 per barrel, and ICE Brent crude oil rose more than 1.6% to $67.68 per barrel, both rising to highs since September 2025, continuing the recent upward momentum. The core drivers come from the tightening of the supply side and the escalation of geopolitical risks.
From the supply side, data from the U.S. Energy Information Administration (EIA) shows that U.S. crude oil inventories decreased by 2.295 million barrels last week, a larger decline than market expectations, reflecting the gradual tightening of U.S. crude oil supply and providing direct support for oil prices. In addition, the escalation of the situation in Iran has further intensified market concerns about crude oil supply. U.S. President Trump recently issued another tough threat to Iran, saying that the next strike on Iran will be more severe and that a large fleet is heading to Iran. In response, Iran’s Foreign Minister said that Iran’s armed forces are in a high state of alert and will respond decisively to any aggression.
Markets are worried that if the situation in Iran further escalates, it may affect crude oil transportation through the Strait of Hormuz, one of the world’s most important crude oil transportation channels, through which about one-third of the world’s seaborne crude oil is transported. Once the situation gets out of control, it will lead to a huge gap in global crude oil supply and further push up oil prices.
In addition, the weakening of the U.S. dollar has also provided indirect support for oil prices. Since international oil prices are denominated in U.S. dollars, the depreciation of the U.S. dollar makes crude oil more attractive to holders of non-U.S. currencies, stimulating increased demand. However, there are certain downside risks in the market. The slowdown in the global economic recovery may restrain crude oil demand, and if demand from major economies is lower than expected, it may limit the upward space of oil prices. Institutions predict that oil prices are expected to maintain a volatile upward trend in the short term, focusing on the follow-up changes in the situation in Iran and crude oil inventory data.
