On May 19, 2026, U.S. President Trump publicly threatened to launch a “heavy blow” against Iran if a peace agreement cannot be reached within a few days, after he had suspended military strikes against Iran. Affected by this news, international oil prices fluctuated and fell as investors weighed geopolitical risks and supply expectations. The July WTI crude oil closed at $104.15 per barrel, and the July Brent crude oil closed at $111.28 per barrel. Citi predicts that Brent oil may rebound to $120 per barrel in the short term.
The geopolitical tensions in the Middle East have been the main factor affecting international oil prices recently. The closure of the Strait of Hormuz due to the U.S.-Iran conflict has pushed up oil prices by more than 50% since the outbreak of the conflict, exacerbating global inflationary pressures. However, NATO’s discussion on assisting ships to pass through the Strait of Hormuz if it does not reopen by early July has eased market concerns about supply disruptions, leading to a slight decline in oil prices. Trump’s latest threat has increased the uncertainty of the U.S.-Iran situation. Although he has repeatedly threatened to resume military operations but failed to implement them, the market still remains cautious about the risk of supply disruptions. The U.S. Treasury also imposed a new round of sanctions on Iran on May 19, further intensifying geopolitical tensions.
Citi pointed out that the oil market has underestimated the long-term supply disruption risks and tail risks caused by the Middle East conflict. In a bullish scenario, Brent oil prices may reach $150 per barrel. It is expected that global crude oil inventories will decrease by about 1 billion barrels this year, mostly outside China, which will further support oil price increases. Industry analysts believe that the short-term trend of international oil prices will continue to be affected by the U.S.-Iran situation and NATO’s actions. If the geopolitical situation escalates further, oil prices may rebound sharply; otherwise, they may maintain a volatile trend.
