During European trading hours on Thursday, February 19, the price of April WTI crude oil futures continued to climb. It was reported at $66.11 per barrel during the session, marking a gain of 1.63%. US and Iranian officials are attempting to bridge differences after negotiations concerning Iran's nuclear program reached an impasse. Although the second round of indirect talks held in Geneva, Switzerland on February 17 made some progress, resulting in a preliminary consensus on "defining common objectives and related technical issues," core disagreements remain unresolved. Iran is expected to submit a more detailed proposal in the coming weeks. On February 18, a White House spokesperson stated that while talks had "made some progress," the two sides remain "far apart" on key issues. The US administration continues to assess the negotiations' progress and has imposed visa restrictions on 18 Iranian officials and telecommunications industry leaders, further highlighting the adversarial stance.
Simultaneously, military confrontations in the Middle East are intensifying. The US is deploying a second carrier strike group, including the USS Abraham Lincoln and USS Gerald R. Ford, from the Caribbean to the Middle East, along with advanced fighter jets like the F-22 and F-35. Reports indicate one US carrier strike group is already deployed in the region, with a second en route, accompanied by over a dozen other warships, hundreds of fighter aircraft, multiple air defense systems, and more than 150 military transport flights moving equipment and ammunition to the area. In response, Iran's Islamic Revolutionary Guard Corps Navy conducted live-fire exercises in the Strait of Hormuz on February 16-17, temporarily closing parts of the waterway for several hours, heightening market concerns over shipping security.
As of 19:00 on February 19, the White House declined to specify any negotiation deadlines or confirm consideration of military options. However, informed sources revealed that US forces are prepared for a potential military strike against Iran "as early as this weekend," though the final decision rests with the US President, who has privately debated the pros and cons and consulted advisors and allies. Israel has elevated its national alert level, preparing for the possibility of failed US-Iran talks. Two Israeli sources indicated that due to signs of a potential joint attack on Iran in the coming days, military preparations are being accelerated. The Israeli Prime Minister has convened multiple special security meetings this week to assess military readiness and US-Israel coordination. An Israeli security cabinet meeting originally scheduled for February 19 was urgently postponed to Sunday, February 22, seen as a tactical adjustment for potential contingencies.
Further reports suggest that any US military action against Iran could be a large-scale operation lasting several weeks, involving coordinated strikes with Israel, significantly larger than the "12-Day War" of last June and posing an "existential threat" to Iran, thereby fueling market risk aversion. Additionally, a senior US official stated that all US forces involved in the Middle East buildup should be deployed by mid-March. The US Secretary of State is scheduled to visit Israel on February 28 to meet with the Israeli Prime Minister to further coordinate stances on Iran.
The primary risk lies in the Strait of Hormuz—a critical chokepoint in the global energy supply chain. The core concern for oil markets is that military action could directly disrupt crude supplies if Iran decides to interfere with shipping through the strait. Analysts estimate that approximately 20% of global oil consumption transits this route. Latest industry data shows about 21 million barrels of oil pass through the strait daily, accounting for 30% of global seaborne oil trade. Over 90% of exports from major producers like Saudi Arabia and the UAE rely on this passage, while 45% to 80% of oil imports for China, Japan, and the EU also transit through it. Markets widely fear that a joint US-Israel attack on Iran would likely provoke Iranian retaliation using long-range missiles against Israel and potentially extreme measures such as blockading the Strait of Hormuz, which could severely impact global oil supplies.
It is important to note that existing alternative routes have insufficient capacity if the strait is blocked. Saudi Arabia's Petroline pipeline has a capacity of about 5 million barrels per day, and the UAE's Abu Dhabi crude pipeline can handle 1.5 million barrels per day. Combined, these land-based routes fall short of half the strait's daily flow, meaning any disruption would directly impact global supply balance. Data from energy consultancies indicates that Iran's recent military exercises alone pushed Brent crude prices up by about 4%. A full blockade of the strait would likely drive prices significantly higher.
Wednesday's 4% surge in oil prices was merely an initial reaction to escalating tensions. On February 18, international oil prices rose sharply, with the March WTI contract closing up 4.59% at $65.19 per barrel and the April Brent contract gaining 4.35% to settle at $70.35 per barrel, underscoring the strong support from geopolitical risks. Market analysis suggests that if conflict erupts, oil prices could rise an additional 5%-10%. A successful Iranian blockade of the Strait of Hormuz could push prices up by another 10%. Even if a ceasefire is eventually reached, the waterway might remain impassable for an extended period due to debris and obstructions, representing a core risk for markets.
From a fundamental supply and demand perspective, the OPEC+ alliance's recent stance on maintaining production cuts provides further support for prices. The eight OPEC+ nations have agreed to maintain current production levels until March 2026, extending the pause on phased production increases that began in December 2025 and sustaining voluntary cuts of 3.24 million barrels per day. Member states show strong unity in their "production cut for price stability" strategy. In January 2026, OPEC+ average daily production decreased by 439,000 barrels month-over-month, exceeding expectations. Concurrently, unplanned supply disruptions in Kazakhstan, Venezuela, and Iran have further reduced global supply flexibility. Meanwhile, investor interest in oil markets is rising, reflected in the surging scale of a domestic ETF linked to oil and gas industry stocks, whose circulating shares increased over nine-fold this year, indicating heightened investor focus on the sector.
Traders are currently focused on several key questions that will determine the extent of the price impact: How long would military action last, and would it evolve into a large-scale, weeks-long operation? Which Iranian targets would be struck? Could Iran successfully impose a full blockade on oil tanker traffic through the Strait of Hormuz, and for how long? Would Iran retaliate against US military bases globally or even targets within the US? Can subsequent US-Iran negotiations achieve a breakthrough on core disagreements, and will the US accept Iran's forthcoming detailed proposal? Ultimately, whether the US President authorizes military action against Iran remains a critical variable for oil price direction.
Historical precedent warns that the impact of geopolitical conflict on oil prices can be persistent. During the Iraq-Kuwait War in the 1990s, Iraqi leader Saddam Hussein launched Scud missiles at Saudi Arabia and set fire to domestic oil wells upon being attacked by US forces, causing a sharp, temporary contraction in global oil supply and a significant spike in prices. Current market concerns are that if US-Iran conflict escalates, Iran might employ similar extreme measures, exacerbating supply shortage risks. Particularly if a large-scale joint US-Israel attack occurs, Iranian retaliation could affect shipping in the Strait of Hormuz and nearby oil production facilities, potentially impacting global crude supplies more severely and persistently than anticipated.
Speculative capital could amplify volatility, with oil prices potentially rising another 10%-20%. While the oil market appears relatively calm on the surface, the situation could change rapidly. Analysis suggests that if war breaks out, speculative funds would aggressively take long positions, forcing shorts to cover aggressively, creating a risk of prices rising 10%-20%. Currently, the geopolitical risk premium is estimated at $5-$8 per barrel, with room to increase if military tensions persist. Furthermore, the broader commodities market shows strength, with gold futures reclaiming the $5,000 per ounce level. Spot gold in London was quoted at $5,015 per ounce, up over 16% year-to-date. The concurrent rise in gold, silver, and oil reflects a mix of safe-haven demand and inflation expectations, driving more speculative capital into commodities and indirectly加剧原油价格波动。
From a technical perspective, the market is driven by momentum and news, with widening volatility ranges. US crude oil has rebounded from its January 2026 low of $54.98, steadily ascending along a clear upward trendline and breaking through previous congestion zones, indicating a strong technical rebound. The price sits firmly above both the 50-day moving average and the 200-day moving average, with short-term averages crossing above long-term ones, confirming a bullish medium-term trend. The RSI reading is at 61.49, within the strong 50-70 range, indicating bullish momentum but nearing overbought territory, warranting caution for a short-term pullback. The MACD indicator shows the DIFF and DEA lines above zero, though the shrinking red histogram suggests the upward pace may be slowing.
Key support levels include the rising trendline, the 200-day moving average, and the 50-day moving average. The immediate resistance is the previous high; a break above this level could open the path to higher targets.
In the long term, expectations for oil prices sustaining above $100 per barrel should be tempered, given ample global crude supplies. Only 20% of oil consumption relies on the Strait of Hormuz. Following the outbreak of the Russia-Ukraine conflict in February 2022, oil futures spiked above $120 per barrel. Four years later, while the conflict continues, prices recently hovered around $60 per barrel, nearly halved, illustrating that geopolitical conflict often provides temporary, not permanent, price support, unable to alter long-term supply-demand dynamics.
Fundamentally, the core focus should be on whether the Strait of Hormuz is blocked and for how long, as this will dictate the height and duration of any price spike. OPEC maintained its forecast for global oil demand growth in its latest monthly report. Simultaneously, the US Energy Information Administration estimates that China is continuously adding to its strategic reserves, absorbing a significant portion of excess global supply and alleviating some oversupply concerns. Overall, while short-term prices are supported by geopolitical risks and may trend higher with volatility, the long-term picture of ample global supply remains unchanged, suggesting significant price increases may be followed by corrections, with a sustained break above $100 per barrel unlikely.