Many investors likely found themselves staring at the screen in disbelief on Thursday as oil prices skyrocketed, a surge significant enough to keep them up at night. Once again, it highlights how people make judgments based on facts and data, yet the trading game they participate in unfolds in the third dimension of emotion and the fourth dimension of dreams. Market volatility has entered an extraordinary phase, with geopolitical risks escalating following US-Iran strikes on tankers and attacks on Saudi energy facilities.

After Brent broke above the $100 mark on Wednesday, WTI crude followed suit just a day later, climbing past $100 per barrel. The Shanghai crude futures contract has also surged past the 800 yuan threshold, making new yearly highs the target once again. Some analysts are already revisiting the possibility of $150 or even $200 oil. Should geopolitical tensions between the US and Iran continue to escalate, such scenarios are not entirely out of the realm of possibility. Currently, neither side shows any signs of compromise, with both continuing to apply pressure on the other.

In the meantime, OPEC's monthly report released on Wednesday evening cut its global oil demand growth forecast for 2026 to 380,000 barrels per day, down from a previous prediction of 580,000 barrels—the fifth consecutive downward revision. On the supply side, the OPEC report revealed that the cartel's crude production increased by 346,000 barrels per day in August, reaching 24.08 million barrels daily. However, Saudi Arabia's report to the OPEC Secretariat showed its crude output fell by 1.9 million barrels per day to 6.238 million barrels, the lowest level since 1990, even dipping below the April figure that was the lowest since the Gulf War. The blockade of the Strait of Hormuz has left Saudi production struggling, and with Houthi forces intensifying attacks on Saudi energy facilities in September, further declines remain a risk.

The market now faces a severe situation as escalating geopolitical risks and supply disruptions have ignited panic buying. This week has seen accelerated price gains, particularly Thursday's massive $9 single-day surge, which far exceeded expectations. This implies that without de-escalation measures on the geopolitical front, oil prices could spiral out of control, delivering a major blow to the global economy. History suggests the US and Iran must make a choice—market participants should strengthen risk management and remain cautious in the current environment.

Daily Market Snapshot

WTI crude futures settled up $6.43, or 6.69%, at $102.48 per barrel, while Brent crude futures gained $6.42, or 6.34%, to close at $107.63. INE crude futures rose 6.19% to 816 yuan. The US dollar index gained 0.3% to 99.08, while the USD/CNH exchange rate on the Hong Kong exchange edged up 0.03% to 6.706. The 10-year US Treasury fell 0.77% to 106.23, and the Dow Jones Industrial Average declined 0.6% to 52,064.1.

Key Developments

US President Donald Trump stated on September 9 that the United States might strike Iran's Fordow nuclear facility, urging Tehran to exercise caution. Speaking at a Republican midterm rally, Trump said, "We've noticed some movements at Fordow. I advise Iran not to try anything clever, because we will hit them hard." Trump previously threatened to strike Fordow in July but has yet to follow through. Iranian Foreign Ministry spokesperson Baghaei responded to US threats on July 22 by saying Iran has no nuclear activities at Fordow, calling America's obsession with the site "nothing but a pretext for aggression, destruction, and sabotage."

According to IRNA news agency, the commander of Tehran's metropolitan military district stated during a military exercise with special operations forces, "We have passed the defensive and air defense confrontation phase and are now on the eve of launching offensive operations. The enemy will soon feel the consequences of this turning point." He added that Iran is forming assault teams and units for special operations and lightning strikes, emphasizing that forces are ready to act at high speed anywhere in the country. "Now, we are prepared to destroy the enemy regardless of its condition. Through years of repeated training, we have developed rapid transport and special operations capabilities. This offensive strategy sends a clear message to the enemy."

Bunker Fuel Supply Eases as Market Adjusts to Hormuz Disruptions

Industry executives at the APPEC conference said that despite Iranian hostilities still limiting Strait of Hormuz exports, bunker fuel supply tensions at major shipping hubs have eased, with the market gradually digesting earlier supply shocks. Rishi Nyati, managing director of shipping firm Emarat Maritime, noted there are no significant obstacles to securing fuel oil and completing bunkering, unlike in March and April, although refueling costs have indeed risen. Market data indicates that direct prices for very low sulfur fuel oil (VLSFO) at Singapore, the world's largest bunker hub, remain over 60% higher than pre-conflict levels. Prices spiked after US-Israeli strikes on Iran in late February and have remained volatile over the past six months, though they have retreated from March highs. Max Tay, head of Asian heavy products at trading firm Repsol, said there is no shortage of fuel supply at present, but whether small supply shocks could emerge remains uncertain. The main challenge lies in sourcing blending components for marine fuels to meet specifications across different buyers and markets. He estimates bunkering activity at the UAE's Fujairah port has recovered to about 40% of pre-conflict levels, while Singapore has remained stable since the war began. Nyati pointed out that the Strait of Hormuz is not fully closed, with approximately 10 to 15 cargo ships passing in both directions daily, primarily via the Omani corridor on the southern side of the strait, and "oil is still flowing."

Singapore's Enterprise Board data for the week ending September 9 showed light distillate inventories rose by 1.196 million barrels to 11.874 million, a one-month high. Middle distillate stocks increased by 326,000 barrels to 8.237 million, a two-week high, while fuel oil inventories fell by 98,000 barrels to 20.355 million, a two-week low.

Saudi Arabia's August Crude Output Plunges to Lowest Since 1990

The OPEC monthly report showed Saudi Arabia reported to the OPEC Secretariat that its crude output fell by 1.9 million barrels per day in August to 6.238 million barrels, again the lowest level since 1990, even surpassing the decline seen in April which marked the lowest since the Gulf War, as renewed US-Iran hostilities squeezed export routes. Saudi Arabia, as OPEC's leader, has suffered another setback after months of recovery, underscoring the prolonged impact of the Iran conflict on Middle Eastern energy producers. Brent crude futures broke above $100 per barrel this week amid renewed attacks on tankers in the Persian Gulf, while surging fuel costs are stoking inflation and squeezing consumers. The sharp production decline reported by Riyadh aligns with preliminary tanker tracking data from agencies, which shows Saudi crude exports fell by about one-third in August to roughly 3 million barrels per day.