Middle East conflict reignites, traders bluntly state "all cushions have been burned out," crude oil market on the verge of collapse.

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The flames of the US-Iran conflict have been rekindled, the Strait of Hormuz is once again on high alert, and this time, the global oil market has no retreat.

Brent crude futures rose more than 10% this week, briefly breaking through $87 per barrel, hitting a one-month high. According to Xinhua, the Trump administration has informed Israel that it is sending additional air forces to the region, hinting that the US military could expand strikes against Iran as early as this weekend. Meanwhile, the US has launched air strikes against Iran for the eighth consecutive night. Iran's Supreme Leader Mojtaba Khamenei stressed that the US would receive a "painful lesson," and Deputy Foreign Minister Gharibabadi announced that Iran would cease implementing the Iran-US memorandum of understanding.

Multiple energy traders have warned that the supply shortage triggered by this round of conflict will be much more severe than the previous one—previously, strategic reserves and commercial inventories used to cushion supply shocks were almost depleted during the last crisis. "We've exhausted all our buffers, all of them. It's all gone now," one trader stated frankly.

Continued Military Escalation; Neither Side Shows Signs of Yielding

According to Xinhua, the US Central Command announced that at 6 p.m. on the 18th Eastern Time, the US launched a new round of air strikes against Iran, aiming to "further weaken Iran's threat to shipping in the Strait of Hormuz and swiftly punish the Islamic Revolutionary Guard Corps for attacks on the US military base in Jordan." According to CCTV news, two US soldiers were killed and one is missing following attacks by Iranian ballistic missiles and drones in Jordan on the 17th, with four others hospitalized. Since the large-scale US and Israeli military actions against Iran at the end of February, American deaths have risen to 16, with over 400 injured.

CCTV, quoting US officials, reported that Iran had launched four attacks against US bases in Jordan over the past five days, damaging several Black Hawk helicopters. US officials believe this shows Iran's forces still have an ample missile stockpile and an improved capability to evade US air defense systems. The Iranian Revolutionary Guard claimed to have destroyed at least two fighter jets and three other aircraft at Muwaffaq Salti Air Base.

Xinhua reported that Iran's Supreme Leader Mojtaba Khamenei stated that repeated US breaches of the Iran-US memorandum of understanding prove the US president’s signature is "worthless and invalid," and stressed that the US attempt to provoke war "will come at a heavier price." Deputy Foreign Minister Gharibabadi said Iran had ceased to implement the memorandum, stating, "If Americans are wise, they should choose another solution."

Hormuz Nearly Paralyzed, Shipping Data Deteriorates Sharply

UBS analyst Henri Patricot said in his daily "Hormuz Tracker" that the crisis in the strait has escalated, with only one oil and gas vessel passing through. The average daily crossings in July have dropped to about 10, a sharp fall from over a dozen in late June and early July, and down drastically from about 50 in February.

In terms of cargo flow, average outbound volume in July so far is around 5.4 million barrels of oil equivalent per day; in June it was 3.7 million, and in May 1.3 million. Excluding Iran, crude oil loadings from the Gulf plunged to 1.0 million barrels per day on Wednesday, down from 6.0 million the day before. The past week's average was 3.2 million barrels per day, lower than the July average of 5.1 million.

The report also noted that crude loadings at non-Hormuz ports like Saudi Arabia's Yanbu and the UAE's Fujairah have also edged lower recently. Patricot believes that as the US and Iran get caught in an escalation spiral, "the path back to normal flows at the Strait of Hormuz has been cut off, and any sustained reopening is postponed."

Buffer Stocks Depleted, No Way Out for Supply Crisis

The International Energy Agency (IEA) revealed Friday that member states have released about three-quarters of the 400 million barrels in emergency reserves announced in March, meaning this buffer source only covers a few more weeks of supply. Energy Aspects founder Amrita Sen pointed out that prior to the US-Iran war, the global oil market had about 400 million barrels in excess inventory, not including government strategic reserves. "Now we have almost nothing... The market's complacency over Hormuz flows is being severely tested."

Bloomberg data shows the fuel market is visibly tightening, with the ICE diesel crack spread closing at a record high, and the Nymex heating oil crack spread at its strongest since March. The Financial Times quoted energy traders as warning that during the previous crisis, Western nations set records releasing strategic reserves, while China cut oil imports and tapped national enterprise inventories, keeping Brent prices capped at a peak of $126 per barrel—well below all-time highs. This time, available tools are almost exhausted.

Natixis analyst Joel Hancock wrote in a report: "Bottom line, the market was previously pricing in an optimistic flow trajectory, and that's now clearly off the table—at least until the next round of diplomatic efforts comes."

Refined Oil Market Simultaneously Under Pressure, Consumption Impacted

Beyond crude, the market for refined oil products is also facing significant strain. Since the outbreak of US-Iran hostilities, European wholesale diesel futures have risen 14% this week. Gasoline and diesel retail prices have been rising fast and falling slowly, with consumers clearly feeling the impact.

The IEA warned on Friday of potential supply risks for gasoline and diesel. In addition, Russian diesel exports have suffered following Ukrainian drone strikes on its refining system, further tightening global diesel supply. Countries like Turkey and Brazil, which previously bought Russian diesel, now must compete with Western nations for alternative sources.

Risk Notice and DisclaimerThe market carries risks, and investment should be cautious. This article does not constitute individual investment advice, nor does it consider the specific investment objectives, financial situation, or needs of any particular user. Users should consider whether any opinions, viewpoints, or conclusions contained in this article are suitable for their own circumstances. Investment based on this article is at your own risk. ```