Oil under the influence of geopolitics: the US–Iran conflict raises the risk premium, but China is cooling price increases — according to recent reports. Please confirm the latest details with a trusted news source.

The global oil market remains in a state of heightened uncertainty. Although tensions between the United States and Iran have once again increased concerns over the security of crude‑oil supplies from the Middle East, oil prices are not experiencing sharp spikes. Investors are simultaneously assessing signs of weaker demand from China and data pointing to shrinking fuel inventories.

Brent crude prices remain near $93 per barrel, while U.S. WTI crude trades at around $90 per barrel.

War returns to oil pricing

According to analysts, recent military actions have reintroduced the so‑called geopolitical premium — an additional price component reflecting the risk of supply disruptions.

The turning point came with U.S. strikes on Iran‑linked targets. The operation followed President Donald Trump’s announcement of a response to the downing of a U.S. Apache attack helicopter.

Analysts note that just weeks ago, the market was focused primarily on supply‑and‑demand fundamentals. Now investors must once again factor in scenarios involving further escalation and potential disruptions to oil transport from the Persian Gulf.

The Strait of Hormuz remains the key risk

The greatest concern centers on the Strait of Hormuz, through which roughly one‑fifth of global crude‑oil trade and a significant share of LNG shipments normally pass.

Iran continues to restrict the movement of most commercial vessels in this strategic chokepoint, while the United States maintains a blockade of Iranian ports. Despite these obstacles, U.S. Energy Secretary Chris Wright has stated that maritime traffic and oil exports through the strait are gradually increasing.

This does not change the fact that Hormuz remains one of the most critical geopolitical flashpoints for the global energy market. Any deterioration in the situation could immediately push commodity prices higher.

The conflict spreads to new fronts

Additional uncertainty stems from tensions involving Lebanon. Tehran has signaled it may resume military action if Israel continues operations against Hezbollah, an Iran‑backed organization.

At the same time, the lack of an agreement between Israel and Hezbollah complicates diplomatic efforts aimed at achieving a lasting ceasefire in the broader conflict involving Iran, Israel, and U.S. forces active in the region.

China limits the market’s upward potential

Despite the tense geopolitical backdrop, the market is not reacting with dramatic price increases. The main counterweight to war‑related risk comes from China. Chinese crude‑oil imports in May 2026 fell to 7.8 million barrels per day, the lowest level since 2017. In 2025, average imports stood at around 11.6 million barrels per day — a drop of roughly 33% compared with last year’s average.

China’s weaker‑than‑expected oil imports raise questions about the pace of economic recovery and future fuel demand. As the world’s largest oil importer — responsible for about 20% of global crude imports — China’s slowdown is currently the main factor limiting price increases.

Analysts emphasize that concerns about China’s economy are effectively dampening market reactions even in the face of armed conflict in the Middle East. The market also assumes Beijing is drawing on massive strategic reserves. Estimates suggest China holds 900 million to 1.4 billion barrels of crude, allowing it to reduce purchases even during supply disruptions.

China’s accelerating transport electrification also plays a role. According to China National Petroleum Corporation, electric and plug‑in hybrid vehicles reduced gasoline consumption by 28 million tons in 2024, lowering overall gasoline demand by 3.1%. EVs and plug‑in hybrids now account for over 60% of new passenger‑car registrations in China, further reducing future demand for gasoline and diesel.

U.S. oil inventories fall for the eighth straight week

Supporting prices, however, are data on U.S. fuel inventories. According to figures based on American Petroleum Institute data, U.S. crude‑oil stocks have declined for the eighth consecutive week.

Gasoline inventories have also fallen, suggesting sustained strong fuel demand during the summer season. Shrinking inventories are one factor keeping oil prices relatively high.

Additionally, the U.S. Energy Information Administration (EIA) warns that global oil stocks could fall to their lowest level since record‑keeping began in 2003. OECD inventories may drop below 2.3 billion barrels by year‑end.

Is the market ignoring the scale of the threat?

The paradox of today’s market is that investors are witnessing both the highest geopolitical risk to oil supplies in years and the weakest Chinese demand in years. As a result, Brent prices remain near $90 per barrel, even though roughly 20% of global oil and gas supplies normally pass through the highly vulnerable Strait of Hormuz.