Brent crude oil surpasses $95 as geopolitical risk premiums fully return

⑴ Brent crude oil futures saw a significant surge on Wednesday, breaking above the $95 per barrel mark for the first time since June 11. Persistent geopolitical tensions combined with signals of real supply disruptions have jointly fueled bullish sentiment in the oil market.⑵ The diplomatic outlook between the US and Iran continues to darken. Iran stated that there are currently no official negotiations with the US and only the possibility of information exchange remains. Meanwhile, US President Trump reiterated his stance on countering the Houthi forces and Iran's nuclear facilities. The US Central Command has carried out strikes against Iranian targets for several consecutive days to maintain the safety of passage through the Strait of Hormuz.⑶ Disturbances in the shipping market continue to escalate. Several tankers carrying Saudi crude oil have turned back or slowed down in the Red Sea; some vessels are rerouting via the Suez Canal. The vessel traffic in the Strait of Hormuz has dropped to a multi-week low. Recent attacks on tankers near Oman and along the Black Sea coast have further amplified anxieties over possible supply interruptions.⑷ The term structure reflects tightening spot supplies, with both Brent and WTI front-month contracts in a deep spot premium. The discount on distant contracts has far exceeded normal levels. Multiple institutions judge that if OECD inventories continue to fall and the conflict persists, Brent crude prices may return to triple digits.