Crude Oil Futures Surge Over 6% on May 18 as Geopolitical Risk Premium Rises

According to Jin10, crude oil futures and low-sulfur fuel oil surged over 6% on May 18, driven by escalating geopolitical risk premiums. Pentagon preparations for potential military action against Iran contributed to the gains, with Bloomberg reporting the U.S. and Israel could resume strikes as early as next week.

HuangChen, crude oil analyst at Huishang Futures, noted that short-term prices have room to rise further if military action materializes, though $120 per barrel may act as resistance. The Strait of Hormuz’s navigation normalization remains unlikely in the near term, supporting the geopolitical risk premium. However, weak global economic recovery and elevated interest rates constrain demand growth, while high U.S. crude production and reduced domestic refinery demand may limit upside.