Geopolitical Tense Situation, Crude Oil Market Trend Will Be Deductive?

Recently, the crude oil market is in a stagnation, worrying about the intensification of trade war to curb economic growth. The US sanctions against Iran have led to tight supply, and oil futures in Europe and the United States have been volatile.

On Friday, crude oil prices fell from a high level due to the easing of the US attitude towards Iraq, ending the previous three consecutive gains.

WTI crude oil prices fell 0.2% to $62.76, up 1.8% this week.

Geopolitical tensions, Iran's main problem

The recent extreme pressure on Iran and Venezuela in the US led to a sharp reduction in crude oil production in the two countries, coupled with the increasingly fierce trade war between China and the United States, and the international geopolitical tensions are heating up again.

There are still many problems and risks in the Strait of Hormuz in Iran.

Saudi Arabia's pport pipeline was damaged after the attack on Saudi Arabia and the United Arab Emirates tanker.

The damaged pipeline is the main way for Saudi Arabia to export crude oil to the Strait of Hormuz.

The recent threat from Iran has become a major problem.

US oil stocks increased, drilling data went down

According to the EIA data released this week, the US crude oil inventories unexpectedly increased last week, the highest level since September 2017, while gasoline stocks dropped more than expected.

The data released by Beck Hughes, an American oil service company, showed that the Usa Energy Inc decreased three oil drilling last week, and the total number dropped to the lowest level in 802 weeks since the fifth week of -2018 in March, which has been reduced for third consecutive weeks.

Statistics of drilling platforms in the United States

How will the trend of international crude oil prices be interpreted?

We will assume 2 situations:

The first case: the short term Iran and Venezuela events continue to heat up, resulting in an intensified international geopolitical risk in the Persian Gulf and the Strait of Hormuz. On the one hand, they continue to reduce the volume of crude oil exports in Iran, and on the other hand promote the increase in international maritime charges. Under the dual factors, they continue to rise to around $75 per barrel. Then, after the United States reached the goal of pushing up crude oil, the Iran problem had a turning point. At the same time, under the high oil price, OPEC announced the resumption of production capacity, quickly callback to $45 / barrel, and then down to 30 US dollars / barrel for a long time.

Second case: the United States used force to attack Iran, the Strait of Hormuz was blocked by US forces, Iran missile counterattacked the US carrier, the United States and Iran fought, and the United States finally defeated Iran.

By then, Iran's crude oil production capacity and international export trade will be reduced to zero. Under such circumstances, the price of international crude oil will reach 120 US dollars / barrel.

But at this time, the global crude oil production capacity will be greatly released by the US, OPEC and Russia, and the new alternative energy will also flourish. Then, with the resumption of production after Iran's peace, the international crude oil will be oversupplied, and the price will plummet rapidly and return to the vicinity of US $30 / barrel.