--- title: "The geopolitical deadlock is difficult to resolve, and the oil market is caught in a tug-of-war" type: "News" locale: "en" url: "https://longbridge.com/en/news/287018291.md" description: "The ongoing conflict between the U.S. and Iran continues to impact the international crude oil market, with Brent crude prices hovering around $111 per barrel. OPEC production has fallen to a 20-year low, with severe supply disruptions in the Gulf region and rapid depletion of inventories, leading to a global oil inventory reduction of approximately 250 million barrels. Despite the pressure from the Federal Reserve's interest rate hikes, the tight spot market supports high oil prices, leaving investors in a complex situation. The oil ETF Huaxia (159189) covers the entire supply chain with low management fees" datetime: "2026-05-20T06:46:33.000Z" locales: - [zh-CN](https://longbridge.com/zh-CN/news/287018291.md) - [en](https://longbridge.com/en/news/287018291.md) - [zh-HK](https://longbridge.com/zh-HK/news/287018291.md) --- # The geopolitical deadlock is difficult to resolve, and the oil market is caught in a tug-of-war The conflict between the U.S. and Iran has lasted nearly three months, and the international crude oil market continues to experience a structural shock dominated by geopolitical games and supply-demand imbalances. Currently, Brent crude oil prices are consolidating at a high level around $111 per barrel. On the surface, news of NATO preparing to take control of the Strait of Hormuz has caused a slight pullback in oil prices, but the fundamental supply-demand situation in the global oil market remains tight, and it is expected to maintain a state of severe volatility for some time to come. (1) Supply side continues to deteriorate, recovery of production capacity is still a long way off Currently, global crude oil supply is at its "darkest hour." Affected by conflicts in the Gulf region, OPEC's monthly production has fallen to its lowest point in over 20 years, with daily supply disruptions from Gulf oil-producing countries peaking at over ten million barrels. More troublesome is the physical bottleneck: due to the blockade of the strait, the available tanker capacity in the Gulf region has been halved, reducing about 130 million barrels. This means that even if all parties suddenly shake hands and the strait reopens tomorrow, the extremely scarce capacity will make the recovery of crude oil exports exceptionally slow. Although OPEC+ plans to slightly increase production, this increment is almost "a drop in the bucket" in the face of the actual blockade. (2) Rapid consumption of inventory, underlying logic remains strong Corresponding to the supply shortage, global oil inventories are being consumed at a record pace. Over the past two months, global inventories have decreased by approximately 250 million barrels, with a daily consumption close to 4 million barrels. This visible inventory crisis has become the most solid foundation for high oil prices. Although rising expectations of interest rate hikes by the Federal Reserve have increased corporate financing costs, putting some pressure on the macro market, compared to the visible shortage of spot supply, the negative impact at the financial level has yet to shake the fundamental support for oil prices. Overall, for investors, the current crude oil market is undoubtedly a tough "hard nut to crack." On one hand, high oil prices are favorable for upstream oil and gas companies; on the other hand, the instability of the international situation makes it difficult to provide a basis for long-term valuation. Corresponding ETF: The Oil ETF Huaxia (159189) tracks the National Index of Oil and Gas, covering the entire chain of oil and gas exploration and development, equipment services, refining and sales, and gas transmission and distribution. As of May 18, the combined weight of PetroChina, Sinopec, and CNOOC, the "three major oil companies," is 37.92%, the highest in the market; the weight of gas is 12.76%, also the highest in the market; the total management fee + custody fee is 0.20% per year, the lowest among similar index funds. Investors can allocate the highest purity oil and gas assets at the lowest cost ### Related Stocks - [OXY.US](https://longbridge.com/en/quote/OXY.US.md) - [XLE.US](https://longbridge.com/en/quote/XLE.US.md) - [CRAK.US](https://longbridge.com/en/quote/CRAK.US.md) - [OIH.US](https://longbridge.com/en/quote/OIH.US.md) - [UCO.US](https://longbridge.com/en/quote/UCO.US.md) - [IEO.US](https://longbridge.com/en/quote/IEO.US.md) - [IXC.US](https://longbridge.com/en/quote/IXC.US.md) - [VDE.US](https://longbridge.com/en/quote/VDE.US.md) - [IEZ.US](https://longbridge.com/en/quote/IEZ.US.md) - [BNO.US](https://longbridge.com/en/quote/BNO.US.md) - [XES.US](https://longbridge.com/en/quote/XES.US.md) - [XOP.US](https://longbridge.com/en/quote/XOP.US.md) - [USO.US](https://longbridge.com/en/quote/USO.US.md) - [159189.CN](https://longbridge.com/en/quote/159189.CN.md) - [399439.CN](https://longbridge.com/en/quote/399439.CN.md) - [601857.CN](https://longbridge.com/en/quote/601857.CN.md) - [00857.HK](https://longbridge.com/en/quote/00857.HK.md) - [600028.CN](https://longbridge.com/en/quote/600028.CN.md) - [00386.HK](https://longbridge.com/en/quote/00386.HK.md) - [600938.CN](https://longbridge.com/en/quote/600938.CN.md) - [00883.HK](https://longbridge.com/en/quote/00883.HK.md) - [HPCD.SG](https://longbridge.com/en/quote/HPCD.SG.md) - [80883.HK](https://longbridge.com/en/quote/80883.HK.md) ## Related News & Research - [Citi bull case Brent hitting $150 near term as oil markets under-price disruption risk](https://longbridge.com/en/news/286992430.md) - [Capital Economics sees oil at $150 per barrel through 2027 in an extreme case](https://longbridge.com/en/news/286549728.md) - [Oil futures lose ground in early US trading](https://longbridge.com/en/news/287089289.md) - [Asia Naphtha/Gasoline-Naphtha prices fall in tandem with Brent](https://longbridge.com/en/news/287056749.md) - [Oil rises more than 1% after drone attack on UAE nuclear power plant](https://longbridge.com/en/news/286683769.md)