On Wednesday (April 15), international crude oil prices rose after experiencing significant intraday volatility. WTI crude oil futures were trading at $91.65 per barrel, up 0.41%, a sharp rebound from a three-week low near $86.96 earlier in the session; Brent crude oil futures rose to around $95 per barrel, down 0.14%. The market is seeking a balance between high geopolitical risk premiums and diplomatic uncertainty, and short-term volatility is expected to remain high.



Geopolitical tensions escalate: Strait of Hormuz blockade fully implemented

Tensions in the Middle East have become the primary driver of current oil prices. U.S. Central Command confirmed that a naval blockade of Iranian ports and the Strait of Hormuz was fully implemented on April 13, deploying over 10,000 U.S. personnel, 12 warships, and more than 100 aircraft, completely cutting off Iranian maritime trade and economic activity. This action is seen as the largest economic pressure tool exerted by the Trump administration since the breakdown of negotiations in Islamabad, aimed at forcing Iran to accept U.S. conditions.

The blockade has caused Iran daily economic losses estimated at hundreds of millions of dollars, prompting the Iranian Revolutionary Guard to issue a strong warning that it would retaliate by blocking shipping lanes in the Persian Gulf and the Sea of Oman if the blockade continues. The ongoing deployment of thousands of additional US troops to the Middle East has further amplified traders' concerns about supply disruptions.

The International Monetary Fund has warned that a prolonged closure of the Strait of Hormuz could trigger a global economic recession; the International Energy Agency estimates that even if the strait were reopened immediately, it would take 60 to 150 days to restore normal oil transport operations. These factors have collectively driven up risk premiums in the oil market.

Diplomatic efforts continue: setting an upward ceiling for oil prices.

Despite increased military pressure, diplomatic efforts have not been completely halted. In an interview with ABC News, US President Trump expressed optimism that the conflict with Iran would "end soon," stating that there was no need to extend the current two-week ceasefire and adding that "the next two days will be interesting," expressing confidence in positive progress in the coming days.

Iranian state media reported that a Pakistani delegation has arrived in Tehran with messages from Washington to discuss facilitating a new round of negotiations to achieve a lasting ceasefire, which may take place this week. Although the first marathon round of talks in Islamabad ended in failure with both sides blaming each other, the market still retains a glimmer of hope for a potential diplomatic breakthrough. This has somewhat curbed the unilateral upward trend in oil prices, keeping WTI crude oil prices relatively stable in the $89-92 range.

The EIA inventory report provides strong fundamental support.

The weekly inventory report released by the U.S. Energy Information Administration (EIA) on the evening of April 15th showed data far exceeding market expectations, providing solid support for the rebound in oil prices. As of the week ending April 10th:

U.S. crude oil inventories unexpectedly fell by 913,000 barrels to 463.8 million barrels (a Reuters poll had expected an increase of 154,000 barrels).

Net crude oil imports plummeted by 2.11 million barrels per day to a record low of 66,000 barrels per day, while crude oil exports surged by 1.1 million barrels per day to 5.23 million barrels per day.

Inventories at the Cushing delivery hub decreased significantly by 1.7 million barrels;

Gasoline inventories fell by 6.3 million barrels and distillate fuel inventories fell by 3.1 million barrels, both significantly exceeding expectations;

Refinery operating rates have dropped to 89.6%.

Bob Yawger, head of energy futures at Mizuho Securities, pointed out that this is the first report since the Strait of Hormuz was blocked that clearly shows global buyers shifting to shipping US crude oil from the Gulf Coast. The sharp decline in imports and surge in exports directly reflects the boost to US crude oil demand from Middle East transportation risks, further tightening the domestic inventory balance. Although the total supply of refined products increased slightly, the overall inventory reduction trend still provided strong support for oil prices. Boosted by the report, crude oil futures quickly recovered most of their morning losses.

Market Outlook: High volatility is expected to continue.

The current crude oil market is characterized by a combination of "high geopolitical risk premiums and a tight fundamental balance." The full implementation of the Hormuz blockade and the US troop buildup have significantly amplified concerns about supply disruptions, and the EIA report has provided data-driven confirmation of this concern. The surge in US crude oil exports is a direct response from the global market to the risks in the Middle East.

In the short term, WTI oil prices are expected to remain highly volatile in the $85-$100 range, remaining extremely sensitive to any sudden developments in the Middle East. Traders should pay close attention to the progress of the potential second round of US-Iran negotiations this week, the actual navigation situation in the Strait of Hormuz, possible retaliatory measures from Iran, and further confirmation from next week's EIA inventory report.

If the lockdown leads to further actual supply disruptions, or if negotiations show clear positive signs, oil prices could experience significant two-way volatility. Given the highly uncertain geopolitical situation and the still fragile diplomatic window, crude oil prices will continue to be primarily driven by news. Investors should closely monitor the latest developments in Washington and Tehran, the implementation of the CENTCOM lockdown, and the Trump administration's next moves, and manage risk prudently.