International crude oil futures rose significantly in early trading on September 10, maintaining their upward momentum throughout the session and closing with a robust gain of over 6%, reaching the highest level since late May. At the close, light sweet crude for October delivery on the New York Mercantile Exchange settled at $102.48 per barrel, up 6.69%, while Brent crude for November delivery on the London ICE Futures Exchange rose $6.42 to settle at $107.63 per barrel, a gain of 6.34%. What are the key drivers behind the recent sustained climb in global oil prices? What pressures and risks will persistently high prices pose to the global economy? Additionally, how might elevated oil prices influence U.S. policy toward Iran?

Experts point to a combination of geopolitical risks and shifting supply-demand dynamics as the primary catalysts for this price surge. According to U.S. media reports on September 10, the sharp escalation of the U.S.-Iran conflict this week propelled October delivery light sweet crude futures on the New York Mercantile Exchange above the $100-per-barrel threshold intraday, marking a three-month high. Wang Ruibin, director of the Institute of World Economics and Development at the China Institute of International Studies, noted that geopolitical tensions are the core factor driving this round of oil price increases. The ongoing instability in the Middle East, coupled with a series of recent attacks on tankers near the Strait of Hormuz, has left oil transport volumes through the strait well below pre-conflict levels. Meanwhile, risks in the Red Sea region have escalated, with threats of armed attacks on Yemen's Mocha port and certain energy infrastructure inside Saudi Arabia, undermining the safety of the Red Sea oil export route. These factors have further tightened expectations for oil supply. Saudi Arabia's crude production fell sharply to 6.2 million barrels per day in August, intensifying market concerns about global supply shortages. Market participants widely believe a ceasefire is unlikely in the near term, with the U.S. indicating the conflict could persist beyond November, fostering a consensus that the situation will remain unresolved for an extended period.

Demand and inventory data also support the upward trend in oil prices. Oil import demand from Asian economies has risen, while crude inventories in major global economies are becoming increasingly strained. In the United States, economic activity remains robust, with a notable drawdown in domestic crude stockpiles. Looking ahead, analysts suggest that as the prospect of a political resolution to the U.S.-Iran conflict dims and the risk of escalation in Yemen looms, oil supply could tighten further, likely keeping prices on an upward trajectory. Wang Ruibin argues that high oil prices represent a global energy supply shock, pushing up costs across the board and reducing real incomes and economic growth in various economies. If this shock persists over the long term, short-term price volatility could evolve into broader risks to political and financial stability. Energy costs directly elevate consumer prices for fuel and utilities, while indirectly raising costs for food transportation and manufacturing. In many economies already grappling with elevated inflation, firms may pass these costs onto consumers, and rising wage expectations could compel central banks to implement tightening or interest rate hikes, increasing borrowing costs for households, businesses, and governments. High energy expenditures erode household purchasing power and squeeze profit margins in sectors such as transportation, chemicals, agriculture, and durable goods manufacturing. Some institutions predict that if oil prices remain high for more than a year, global economic growth could decline by 0.5% to 2%. European economies and Asian economies heavily dependent on oil imports would face the most significant impacts, with emerging markets in South Asia, Southeast Asia, and parts of Africa—which rely heavily on energy imports and often lack sufficient foreign exchange reserves while also needing to import food and fertilizers—being particularly vulnerable. Financial markets would also come under pressure, with government bond yields rising across various economies. If energy tensions persist, inflation expectations could climb further, leading to higher bond yields and lower price-to-earnings ratios in energy-intensive stock sectors. A sustained period of high oil prices could expose some economies to the dual pressures of worsening inflation and a rising risk of recession.

From a U.S. domestic perspective, rising oil prices are intensifying concerns about inflation. President Donald Trump stated on September 9 that the United States is not seeking an agreement with Iran and predicted that oil prices would not decline until after the November midterm elections. According to Wang Ruibin, the oil price issue has become a focal point of contention in the U.S. midterm elections. Voters view gasoline prices as the most direct indicator of inflation, and oil price trends could significantly influence electoral outcomes. If there are further attacks on oil tankers or infrastructure in the Middle East before the midterm vote, international crude prices could remain at the $100-per-barrel level, with diesel prices rising in tandem, which would raise political costs for the Republican Party. The U.S. government's early signaling that oil prices will remain high until the election appears aimed at shifting blame outward and alleviating voter dissatisfaction. The Republican Party is cautious about large-scale military actions that could disrupt oil production or transport through the Strait of Hormuz, fearing such moves would drive prices higher and harm their electoral prospects. As a result, they are more inclined toward limited, defensive retaliatory measures that pressure adversaries while gaining voter approval. After the midterm elections, if the Republicans continue to control Congress, a new political landscape could prompt the U.S. government to adopt a harder line against Iran or alternatively push toward reaching a relevant agreement.