U.S. Crude Oil Rises 1% in a Day, Returns to $100 per Barrel
U.S. crude oil (WTI) rose about 1% during the day, returning to the $100 per barrel mark, one of the few times it has reached this level since May. Meanwhile, Brent crude oil has consistently remained above $100, reporting $104.33 per barrel on September 18.
The price recovery did not happen overnight. Around September 7, Brent was reported near $98.5 (up 2.3%), and WTI was around $94 (up 2.7%); in the following trading days, supply concerns intensified, causing WTI to drop to around $93 before breaking through $100 again on September 10 for the first time since May; Brent also rose to around $105 on the same day. The increase in early September was primarily driven by escalating geopolitical conflicts rather than changes in demand.
The driving factors are concentrated in the Middle East. The U.S. recently targeted three Iranian oil tankers, with two permanently disabled and one destroyed; the Houthis have attacked Saudi Aramco refineries three times in two weeks, forcing Saudi Arabia to close some southern energy facilities; Iran is bypassing the U.S. and negotiating temporary passage arrangements through the Strait of Hormuz with Oman. Goldman Sachs estimates that the global crude oil market currently maintains a supply gap of about 1 million barrels per day, with actual supply in the Gulf region only recovering to about two-thirds of pre-conflict levels, barely compensated by pipeline diversions.
Political statements have further extended market expectations regarding the duration of the conflict. Trump stated that the Iran conflict would last at least until after the midterm elections, and his senior advisors are preparing for the war to extend beyond November; this statement directly raised the risk premium on oil and pushed U.S. 10-year Treasury yields to a cycle high. Polls show that 47% of registered voters list the cost of living as the primary issue for the midterm elections, with 71% of respondents dissatisfied with Trump's handling of price issues, and only about one-third of Americans approving of his approach to Iran (about two-thirds approval among Republican voters).
End-user consumption has become noticeably impacted. For the week ending September 10, the national average gasoline price was reported at $4.224 per gallon, continuing to rise from the previous day's $4.151; the average diesel price reached a historic high of $5.942 per gallon. Compared to about $3.1971 per gallon a year ago, the year-on-year increase is nearly 30%. Analyst John Kemp pointed out that U.S. gasoline inventories have fallen to "critical levels," compounded by a significant reduction in the number of refineries compared to 30 years ago, and with the maintenance season approaching, there is unlikely to be substantial relief on the supply side in the short term.
On the financial side, hedge funds have significantly increased their long positions in this round of market activity. As of the week ending September 8, net long positions in U.S. crude oil futures and options increased by 21,153 contracts to 140,046 contracts, the highest level since May, with net long positions on the New York Mercantile Exchange (NYMEX) rising by 19,720 contracts to 139,339 contracts. Earlier data from September 1 showed that hedge funds had reached a net long position of 177 million barrels in gasoline and diesel contracts, while the crude oil position itself remained "moderately bearish"—indicating that this round of price increases was first captured by the shortage of refined products rather than crude oil itself. Goldman Sachs has raised its December 2026 Brent target price from $80 to $85, and WTI from $75 to $80, warning that if Gulf supplies continue to be severely disrupted, Brent could rise to $120.
In mid-August, the diesel crack spread reached historic highs in both the U.S. and Europe, reflecting that refining profits have been further pushed up by tight supply, which is also the direct reason for refined product prices rising faster than crude oil itself.
Source: Public Information
ABAB AI Insight
Goldman Sachs' adjustment of target prices in this round of conflict is not an isolated case. At the beginning of the Russia-Ukraine conflict in 2022, Goldman Sachs similarly raised its Brent target price from the $80 level to $130 within weeks; after the attack on Saudi Aramco in 2019, oil prices jumped nearly 15% in a single day, also initially indicated by Goldman Sachs and other institutions as a short-term extreme scenario. The operation on September 7 is a replay of the same path: first providing a baseline adjustment to $85/$80, then separately listing a $120 "extreme scenario" as a risk exposure warning, essentially pricing the uncertainty of geopolitical conflict directly rather than waiting for the conflict's outcome to clarify before making adjustments.
In terms of financial pathways, the sequence of this round of market activity is noteworthy: data from September 1 showed that hedge funds first increased their positions in gasoline and diesel contracts (net long of 177 million barrels), while the crude oil position itself was still somewhat bearish; it was only a week later that net long positions in crude oil caught up, surging over 20,000 contracts to above 140,000 contracts. This "first increasing positions in refined products, then in crude oil" financial pathway indicates that smart money first bet on the actual shortage at the refinery level (the number of U.S. refineries has significantly decreased compared to 30 years ago), rather than simply betting on the escalation of geopolitical conflict; supply chain bottlenecks were priced in earlier than the war news itself.
In industry comparisons, this round of supply shock is more akin to the Gulf War in 1990 (after Iraq's invasion of Kuwait, oil prices doubled within months) and the 1973 oil embargo (supply was directly weaponized), rather than the conventional OPEC+ production cut cycles. The key difference at this stage is that the shock point is not a voluntary production cut by oil-producing countries, but direct attacks on transportation routes (the Strait of Hormuz) and oil tankers themselves—this makes the industry's current phase more akin to a "capacity war" rather than a "production war," with OPEC+'s influence in pricing clearly marginalized in this round.
Essentially, this is a transfer of pricing power from "production managers" to "military conflict creators." In recent years, the anchor point for oil prices has been OPEC+'s monthly production decisions and the marginal cost of U.S. shale oil, but when tankers are sunk, refineries are bombed, and passage through the strait requires mediation from third countries, market concerns about whether "supply can physically arrive" far outweigh concerns about "weekly inventory data." The mechanism of this structural switch lies in the fact that pricing military risk has no historical benchmarks for reference; traders can only value it using "worst-case scenarios multiplied by probabilities," which naturally sets the risk premium higher, faster, and more emotionally than conventional supply-demand models.
ABAB News · Cognitive Law
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