U.S. will keep key oil routes open, even if it strikes Iran - analyst

Geopolitical Impact on Oil Prices - President Trump is expected to decide within 10 to 15 days whether to continue negotiations with Iran or initiate military action, which has led to increased oil prices, with WTI trading at $67 per barrel and crude above $72 per barrel [1][2] - Oil prices have risen more than 6% this week and have seen double-digit gains so far this year, primarily driven by geopolitical tensions related to the US-Iran situation [3][4] Market Fundamentals and Supply Concerns - Despite a generally well-supplied global oil market, three factors are supporting current prices: concerns about Iran, significant buying by China for stockpiling, and high freight rates [6][7] - Analysts initially forecasted oil prices in the $60 range based on fundamental data, but current prices around $72 reflect a combination of geopolitical risk premiums and other factors [5][11] Price Volatility and Future Projections - The oil market is experiencing volatility due to a shift in sentiment regarding supply risks, with potential price spikes if military action occurs, which could lead to demand destruction at prices above $100 to $120 per barrel [8][22] - Historical data suggests that while military interventions may raise concerns, they do not always result in actual supply disruptions, indicating a cautious approach to forecasting future price movements [17][21] Chinese Demand and Inventory Dynamics - Chinese inventory builds have been a significant factor supporting oil prices, and a slowdown in this buying could provide relief to the market if prices spike [23] - The market is closely monitoring the Strait of Hormuz, a critical chokepoint for global oil supply, with historical trends indicating it is unlikely to remain closed for extended periods [19][20]