Oil Market in Chaos: Attacks Continue, Trump Urgently Calls for Foreign Warships to Help

Source: Huizhong.com

Huizhong Finance APP News — On Monday, March 16, the international crude oil market is in a state of high tension. Brent crude futures fluctuate between $102 and $106 per barrel, currently around $103 per barrel (slightly down intraday but still above $100). WTI crude futures hover around $97 to $100 per barrel, latest near $97. This level is the highest since July 2022, mainly driven by escalating Middle East geopolitical conflicts, especially military actions around the Strait of Hormuz causing a sharp reduction in shipping traffic and suspension of loading at some ports. The International Energy Agency (IEA) has coordinated member countries to release a record 400 million barrels of emergency reserves to ease supply pressure, but market concerns over actual supply losses remain dominant. The U.S. has called on multiple countries to jointly maintain the strait’s navigation, with European allies’ responses drawing attention.

Geopolitical Risks Push Oil Prices to Recent Highs

Recent escalation in Middle East conflicts includes attacks on the UAE’s Fujairah port for three consecutive days, causing suspension of crude oil loading at this key export node outside the strait. Saturday’s drone attack disrupted major UAE export routes, further increasing supply chain uncertainty. The U.S. has struck military targets on Iran’s Hegra Island, a major Iranian oil export hub. Iran media claims loading continues, but markets interpret this as a significant increase in supply disruption risk. The Strait of Hormuz accounts for about 20% of global oil flow daily; recent vessel traffic has slowed significantly or nearly stalled, with some days recording only a single transit. Traders are closely monitoring actual supply gaps; if the strait is effectively blocked, daily losses could reach several million barrels, far exceeding current buffer stocks.

Trump Calls for International Joint Intervention to Secure Strait

President Trump publicly urged affected countries to send warships to jointly maintain the Strait of Hormuz’s openness and security via social media. He specifically named France, Japan, South Korea, and the UK, noting these countries import large amounts of oil from the Gulf and should participate actively. He warned that if European countries refuse support, NATO’s prospects will be “very bad.” This statement briefly boosted market expectations of multilateral intervention, easing some fears of extreme supply disruptions and causing oil prices to retreat slightly from intraday highs. However, actual response strength remains uncertain; European countries’ cautious stance on military intervention may limit the scale of joint actions. Trump emphasized the need to lift “artificial constraints” on the strait, seen as a diplomatic pressure signal rather than an immediate military escalation.

IEA Record Reserve Release and Supply-side Response

To address potential supply disruptions in the Middle East, IEA member countries agreed to release a record 400 million barrels of emergency reserves (about 72% crude oil, the rest refined products), the largest ever. This move aims to quickly inject liquidity into the market and buffer potential physical gaps. Key data comparison:

While reserve releases provide short-term support, ongoing conflicts and cumulative production interruptions will test stock depletion rates. Traders focus on the pace of releases and logistics efficiency; short-term oil price volatility is expected to remain high.

Market Sentiment and Risk Transmission

After breaking above $100 per barrel, the WTI-Brent spread narrowed, reflecting increased linkage between global benchmarks. Geopolitical premiums dominate the trend. On the fundamentals side, non-OPEC+ producers show limited willingness to increase output; U.S. shale rig counts have recently risen slightly, but responding to high oil prices still takes time. Rising energy costs have been passed downstream to chemicals, transportation, and other sectors, re-pricing global inflation expectations. Traders should watch for intensified bullish and bearish battles; any signs of strait reopening could trigger rapid corrections, while further attacks might push prices higher. Overall, supply-side uncertainties outweigh demand weakness, and the short-term tight market structure is unlikely to change.

FAQs

Q1: Why does oil price remain above $100 per barrel despite IEA’s massive reserve release?
A: Although the IEA’s 400 million barrel release is unprecedented, it mainly addresses potential supply interruptions rather than confirmed long-term shortages. The significant decline in Strait of Hormuz flow has caused real logistical bottlenecks, with Fujairah port suspensions and Hegra Island attacks increasing uncertainty. Market pricing is forward-looking; traders focus more on whether conflicts escalate to cause daily flow losses of millions of barrels rather than short-term inventory injections. Therefore, even with reserves released, geopolitical premiums dominate, making it difficult for prices to quickly fall back to pre-conflict levels.

Q2: How does Trump’s call for multilateral intervention impact oil prices?
A: Trump’s public appeal and warning about NATO’s prospects temporarily improved market expectations for multilateral action, easing fears of extreme supply disruptions and causing a slight retreat from recent highs. However, actual effectiveness depends on allies’ responses. Currently, European countries are cautious about direct military involvement, and Asian importers like Japan and South Korea will weigh risks carefully. The statement is more diplomatic pressure; without concrete deployment or escort actions, market confidence remains limited, and oil prices could still be driven by sudden attack news.

Q3: What would happen if the Strait of Hormuz remains blocked long-term?
A: The strait accounts for about 20% of global oil flow. Effective blockage could cause daily losses of several million barrels, far exceeding the IEA’s single-release scale. Iran’s exports would continue but Gulf neighbors’ exports would be severely impacted, accelerating global stock depletion. Downstream refineries would face raw material shortages, pushing up crack spreads and faster rising refined product prices. Long-term, non-OPEC+ responses to high prices are sluggish; demand might show elastic decline, but supply rigidity dominates, potentially pushing prices higher until diplomatic or military solutions are reached.