By the end of April to early May 2026, international oil prices continued to rise. On May 1st, the new front-month July contract for Brent crude oil broke above $110 per barrel, with WTI briefly reaching $110.31, hitting a new high in over four years. The core logic driving this round of price increases is different from previous cycles, characterized by distinct structural features.

Main reason: Supply shocks dominate, prices below theoretical values

The fundamental driver comes from geopolitical tensions. The US-Iran conflict has entered its third month, with the Strait of Hormuz traffic volume dropping by over 90%, disrupting approximately 14 million barrels per day of global oil transportation, with about 69 million barrels of Iranian oil stranded at sea. The supply gap is the largest in history. However, strangely, such a large shortfall has not pushed oil prices into the previously expected $150-$200 range. There are three buffers behind this: pre-war global oil inventories of 580 million barrels released in advance, strategic reserves partially filling the gap, and demand naturally shrinking due to high oil prices. More importantly, speculative positions in the futures market generally believe the conflict will end quickly, which has preemptively suppressed the price ceiling.

On the other side, demand-side logic is also shifting — this is not inflation driven by demand, but a passive imbalance caused by geopolitical disruptions cutting off the fuel supply chain directly, with pricing power more concentrated in the game over the size of the supply gap.

The impact of the sudden change in the oil market on the macroeconomy is clear: pushing up inflation → testing central banks → suppressing growth. CICC estimates show that if oil prices rise to $120 for the whole year, US CPI will be an additional approximately 2 percentage points, and GDP growth may fall to 1.3%. Market expectations of the Federal Reserve cutting interest rates quickly shrink to around 24%. The 10-year US Treasury yield stabilizes above 4.40%, and under the dual pressures of high oil prices and tightening environment, the economy faces the realistic risk of a "stagflation-like" scenario.

For the cryptocurrency market, the impact of oil prices is more reflected through the transmission of interest rate expectations. Oil prices surge → inflation becomes sticky → the Fed is forced to maintain tightening stance → nominal and real interest rates rise, putting pressure on valuation denominators of risk assets. Bitcoin during this period fell below $76,000, with the transmission relationship shifting from a past positive correlation to a negative divergence driven by liquidity tightening expectations.

Meanwhile, the options market shows noteworthy hedging signals: as oil prices break above $110, Brent crude oil put options continue to outnumber call options. Smart money is not aggressively betting on soaring oil prices but is instead hedging against the tail risk of a sudden resolution of geopolitical conflicts and a sharp retreat in oil prices. This "price upward, options downward" divergence indicates that the market’s overall focus is shifting from "whether prices will rise" to "when they will fall."

Overall, the core logic of this round of oil price rally has been fully priced in by the market over the past few months, with the unprecedented supply gap temporarily buffered by multiple parties. Whether from macroeconomic derivation or risk pricing, the urgency of a cycle turning point is accumulating. The true contradictions that will determine the future are no longer just about when the Strait will reopen, but more about the interplay between inflation data, red lines in US-Iran negotiations, and financial conditions.