By the end of April to the beginning of May 2026, international oil prices continued to rise. On May 1, the new benchmark July contract for Brent crude oil moved above $110 per barrel. WTI briefly touched $110.31, marking the highest level in more than four years. The core logic driving this round of gains has, unlike in previous periods, clear structural characteristics.

Core reason: supply shocks dominate, with prices falling below theoretical values

The fundamental driver comes from geopolitics. The US-Iran conflict has entered its third month. Traffic through the Strait of Hormuz has plunged by more than 90%. About 14 million barrels per day of global crude oil transportation has been disrupted, and roughly 69 million barrels of Iranian oil is stranded at sea. The size of the supply-side shortfall is the largest in history. Strangely, however, such a massive shortfall has not pushed oil prices into the previously expected $150–$200 range. Behind this are three layers of buffers: before the war, global crude oil inventories of 580 million barrels were released first; strategic reserves partially made up the gap; and demand naturally shrank due to high oil prices. More importantly, in the futures market, speculators generally believe the conflict will end quickly, which has suppressed the price ceiling in advance.

On the other hand, the logic on the demand side is also changing—this is not inflation driven by demand. Instead, it is a passive imbalance caused by geopolitical forces directly cutting off the fuel supply chain, with pricing power shifting more toward the bargaining over the size of the supply-side gap.

The pathway by which the oil market’s sudden shift affects the macroeconomy is clear: it raises inflation → tests central banks → suppresses growth. CICC estimates that if annual oil prices rise to $120, the US CPI would be lifted by an additional roughly 2 percentage points, and GDP growth could fall to 1.3%. Market expectations for the Federal Reserve to cut interest rates have rapidly retreated to around 24%. The 10-year US Treasury yield has held steady above 4.40%. Under the double squeeze of high oil prices and a tightening environment, the economy faces a real risk of a “stagflation-like” outcome.

For the cryptocurrency market, oil prices affect it more through the transmission of interest-rate expectations. Oil prices surge → inflation becomes sticky → the Fed is forced to maintain a tightening stance → nominal and real interest rates rise, putting pressure on the valuation “denominator” of risk assets. During this period, Bitcoin fell below $76,000, and the transmission relationship has shifted from the previous positive correlation to a negative divergence driven by expectations of tightening liquidity.

At the same time, the options market has shown a hedging signal worth noting: when oil prices break above $110, the trading volume of Brent crude oil put options continues to exceed that of call options. Smart money has not aggressively bet on oil prices to soar; instead, it has started to hedge the tail risk of “geopolitical conflicts ending suddenly and oil prices rebounding off a cliff.” This divergence—“prices up, options down”—suggests that the market’s overall focus is transitioning from “whether prices will rise” to “when prices will fall.”

Overall, the core logic behind this round of oil-price upside has already been fully priced in by the market over the past few months. The unusually large supply shortfall is currently being temporarily cushioned by multiple parties. Regardless of macroeconomic reasoning or risk pricing, the urgency of a cyclical turning point is building. The real contradictions determining the outcome are no longer simply about when the strait will reopen, but more about the interplay among inflation data, red lines in US-Iran negotiations, and the cross-effects of financial conditions. #油价突破110美元