US President Trump's statement that "the war may be over soon" was like a bombshell, causing oil prices to plummet to below $80, rapidly reducing inflation expectations and igniting a surge in gold prices. Spot gold prices rebounded strongly by over 1% on Tuesday, with the market sensing a return to bullish sentiment.

The G7 energy ministers' meeting last week also failed to reach an agreement on releasing strategic petroleum reserves, only requesting the International Energy Agency to further assess the situation. These uncertainties have once again highlighted gold's safe-haven appeal—when the oil market experiences sharp fluctuations, gold often becomes the most reliable "safe haven" for investors.

Geopolitical upheavals ignite resource competition: the threat of a Strait of Hormuz blockade and the IEA's record-breaking reserve release plan are fiercely clashing. Gold is under pressure from inflationary pressures and a lack of safe-haven assets. Oil supply is fluctuating, and the market is holding its breath awaiting the final outcome of this power struggle between war and policy—who will prevail?

Currently, major Middle Eastern oil-producing countries, including Saudi Arabia, the United Arab Emirates, Kuwait, and Iraq, have collectively reduced oil production by more than 6 million barrels per day. Meanwhile, the forced shutdown of one of the UAE's largest oil refining facilities following a drone attack further exacerbated market concerns about supply chain stability. Multiple factors combined to keep risk premiums in the crude oil market at a high level.

Last Week's Market Performance Review:

As the war with Iran continued to escalate and shipping in the Strait of Hormuz nearly ground to a halt, international oil prices surged again, dragging down all three major US stock indices. Amid renewed inflation concerns due to soaring oil prices, further cooling of expectations for a Fed rate cut, and spreading concerns about private lending, investors accelerated their withdrawal from the stock market, putting pressure on almost all sectors except energy stocks. US stocks were significantly pressured. All three major indices hit new closing lows since 2026, with the Dow Jones Industrial Average, composed of 30 components, falling below 47,000 points for the first time this year.

Last week, despite a new round of attacks on Iran by the US and Israel and the continued escalation of tensions in the Middle East, gold, traditionally a safe-haven asset, suddenly plummeted by nearly $150 to $5,050, failing to deliver the strong performance expected by the market. Gold prices briefly rose after the outbreak of conflict on February 28, but quickly gave back those gains. Entering the second week of the latest round of conflict, gold prices generally remained range-bound, indicating that the safe-haven logic is being constrained by multiple factors, including a stronger dollar, rising US Treasury yields, and liquidity pressures.

Last week, silver prices fluctuated widely between $80 and $90 per ounce, as investors weighed safe-haven demand from the escalating Middle East conflict against a stronger dollar and rising Treasury yields. Although margin calls triggered by stock market declines caused volatility in the precious metals market, geopolitical risk premiums remained a key supporting factor.

The US dollar index broke through 99.70 in the latter part of last week, rising for the fourth consecutive trading day to reach near 100.50, its highest level since November 2024, due to the escalating conflict with Iran. Iran's new Supreme Leader stated that the Strait of Hormuz should remain closed, adding that the war would continue "if necessary," and other fronts were being considered. Meanwhile, as expectations of interest rate cuts cooled, US Treasury yields rebounded recently, and the US dollar index strengthened accordingly.

The euro fell to around 1.14 against the dollar, its lowest level since November 24th of last year, as continued uncertainty surrounding the Middle East conflict strengthened the dollar and exacerbated concerns about rising inflation in the eurozone. Oil prices rebounded, briefly breaking above $100 a barrel, after Iran intensified its attacks on oil and transportation infrastructure in the region. The dollar hovered around 159.70 against the yen, reaching a high of 159.75. This movement was mainly driven by the continued escalation of conflict in the Middle East, with the yen regaining favor as a traditional safe-haven currency. Overall, geopolitical risks are dominating short-term sentiment in the foreign exchange market, while the long-term uncertainty surrounding the disruption of shipping in the Strait of Hormuz further amplifies the yen's upside potential.

The pound/dollar continued its decline for several consecutive trading days last week, briefly falling below 1.3300. The short-term bias is slightly bearish, as the spot price remains below the declining nine-day exponential moving average and is now trading below the relatively flat 50-day moving average, indicating that upward momentum is weakening after the rejection from the 1.36 area. The Australian dollar hovered near 0.7000 against the US dollar, showing resilience recently boosted by policy expectations, despite a slight correction during the day. With the Reserve Bank of Australia's meeting next week approaching, the market's probability of a 25 basis point rate hike has risen to approximately 62%, driven by continued better-than-expected economic data following the February rate hike and a moderate rebound in inflation.

US crude oil traded around $97.30 per barrel. Oil prices rose more than 9% in the latter half of last week, reaching a near four-year high, as Iran intensified its attacks on oil and transportation facilities in the Middle East, with its new supreme leader vowing to continue blocking the crucial Strait of Hormuz. The International Energy Agency warned that the conflict is triggering the worst oil supply disruption in global market history, with Gulf states cutting at least 10 million barrels per day of crude oil production, equivalent to nearly 10% of global demand, while the previously approved release of a record 400 million barrels of strategic reserves only represents about 25 days of disruption.

Oil prices rebounded above $100 a barrel as market concerns escalated over the conflict with Iran, while Bitcoin weakened and is currently trading below $70,000. Bitcoin briefly touched $71,230 before news of the tanker attack broke, but subsequently fell nearly $2,000 within hours. This marks the third time in the past two weeks that Bitcoin has broken above $71,000 only to be quickly pushed back down by escalating conflict in the Middle East.

The yield on the 10-year U.S. Treasury note rose to 4.27% on Friday, hovering near a four-week high, after a brief dip earlier in trading due to the ongoing conflict with Iran. The Federal Reserve will decide on monetary policy next week, and while the federal funds rate is not expected to change, the market will be closely watching for clues from policymakers regarding their outlook for the remainder of the year. Investors currently only expect the Fed to cut rates once in 2026.

Market Outlook This Week: This week (March 16-20), financial markets will enter a high-volatility window driven by four factors: the Fed's interest rate decision, US inflation, geopolitics, and earnings reports. The core themes are policy expectation repricing, the interplay between safe-haven demand and reflation, and earnings validation.

Asset Outlook for Three Major Asset Classes:

US Dollar Index:

Core Logic: Weak non-farm payrolls + resilient inflation + Fed's "high interest rates for longer" + geopolitical safe-haven support. Range: 98.49-100.00. Conclusion: High-level consolidation with a slight upward bias. If the dot plot reduces the number of rate cuts after the interest rate decision, the dollar is likely to rise above 100 again.

EUR/USD:

Core Logic: Eurozone stagflation pressure, ECB rate cut expectations preceding the Fed, and strong dollar pressure. Range: 1.0500-1.0700. Conclusion: Weak fluctuations; a break below 1.0500 would target 1.0400; a break above 1.0700 requires a clear dovish shift from the Federal Reserve.

Spot Gold:

Core Logic: Safe-haven demand + central bank gold purchases + expectations of interest rate cuts vs. pressure from the US dollar/US Treasury yields + profit-taking at high levels. Range: 5100-5250; strong support 5065-5100, resistance 5230-5250. Conclusion: High-level fluctuations; cautious ahead of the interest rate meeting; if expectations of interest rate cuts strengthen after the meeting, an upward trend is expected to resume.

This Week's Trading Theme:

Three Main Themes:

Policy Pricing Theme: FOMC dot plot and PCE determine the medium-term direction of the US dollar, US Treasury bonds, and gold.

Safe-haven/Reflation Theme: Middle East situation + oil prices → affecting gold, crude oil, energy stocks, and inflation-sensitive assets.

Earnings Focus: US/A-share earnings reports validate profitability, determining growth/value and sector rotation.

Regarding this week's risks:

**Federal Reserve Hawkishness Surpasses Expectations:** The dot plot lowers the number of rate cuts expected in 2026 → Dollar and US Treasury yields jump, gold and US stocks under pressure.

**Middle East Conflict Escalates:** Oil prices break $90 → Global inflation concerns → Central bank rate cuts postponed → Risk assets adjust.

**Unexpected US Data:** PCE exceeds expectations → Rate cut expectations cool; Employment weakens again → Recession concerns rise.

**Earnings Disappointments:** High-valuation sectors underperform expectations → US stock volatility surges.

**Earnings Disappointments:** This Week's Conclusions:

Key Conclusions of Global Financial Markets This Week:

Geopolitical upheavals ignite resource competition: The threat of a Strait of Hormuz blockade and the IEA's record-breaking reserve release plan are fiercely contradictory. Gold is under pressure amid inflationary pressures and a lack of safe-haven assets. Crude oil supply is fluctuating, and the market is holding its breath awaiting the final outcome of this war and policy struggle. Who will prevail?

The Federal Reserve's March policy meeting (March 17-18) will maintain high interest rates. The dot plot and Powell's speech are the biggest variables. After the easing of geopolitical conflicts, crude oil is fluctuating at high levels, while gold is trending slightly higher. The US dollar index is fluctuating slightly higher, and the offshore RMB is fluctuating within a range. US stocks are focused on Nvidia's GTC and earnings reports, while A-shares/Hong Kong stocks are fluctuating, with structural opportunities as the main theme.

Iran's "new spiritual leader" takes office, but Trump wants to "call it a day"?

US President Trump stated last week that he plans to exempt oil-related sanctions, have US Navy escort oil tankers through the Strait of Hormuz, and predicted that the war with Iran will end "soon." This statement came against the backdrop of several days of sharp fluctuations in the oil market and increasing economic and political pressures, aiming to alleviate market concerns about energy prices. However, the continued closure of the Strait of Hormuz, the strong signals from Iran's new leader, and the risk of multi-party conflicts in the region remain highly uncertain.

Potential Options for Trump to Address Soaring Oil Prices

Trump is considering several measures to address the sharp rise in oil and gasoline prices triggered by a potential war with Iran. These options may include releasing emergency oil reserves, suspending the federal gasoline tax (subject to congressional approval), and the US Treasury's intervention in the oil futures market. Treasury Secretary Bessant had previously suggested further waivers of sanctions on Russian oil, and a week earlier, Indian refineries were temporarily allowed to purchase more Russian oil.

Despite repeated assurances from US officials that the conflict could continue indefinitely, Trump's remarks indicate that the White House is publicly expressing a willingness to end hostilities as soon as possible, marking a certain shift in policy stance.

Earlier this week, Trump told Republican lawmakers, "We are working with our Israeli partners to crush our enemy with overwhelming technological capability and military power." At the same time, Trump acknowledged that the leadership issue in Tehran remains unresolved and vowed, "We will not let up until our enemy is completely and decisively defeated." He mentioned that the U.S. has sunk more than 50 Iranian ships and that if the conflict continues, the U.S. may bomb more "important targets," including power generation facilities. Trump said, "We have won in many ways, but it is not enough. We will move forward with unprecedented determination to achieve a complete victory and permanently eliminate this long-standing threat." These remarks highlight the challenges facing Trump: he must balance the promise of a decisive victory with the economic and political consequences of a continued war.

Market Reaction and Energy Supply Dynamics

Following initial comments from Trump expressing a willingness to end the conflict, U.S. stocks rebounded from earlier Monday losses, with the S&P 500 rising as much as 1%. Oil prices and U.S. Treasury yields subsequently fell.

U.S. crude oil futures experienced significant volatility during the trading day, briefly exceeding $119 per barrel before settling below $90. Market easing stemmed in part from major global economies considering coordinated releases of emergency energy reserves and from Trump's signals that he might seek to de-escalate the conflict.

The Strait of Hormuz remains almost completely closed, with no agreement yet reached on how countries will ensure the safety of ships passing through this crucial waterway. Trump stated that ship traffic in the strait has increased and that he is "considering taking over the strait." The closure of the Strait of Hormuz has been called a "small price to pay to destroy the Iranian nuclear threat," but specific actions remain unclear.

Faced with domestic pressure from persistent inflation and rising gasoline prices ahead of the November midterm elections, Trump said on Sunday that a $100-a-barrel oil price was "a small price to pay to destroy the Iranian nuclear threat," adding that "the cost will drop rapidly once the Iranian nuclear threat is destroyed."

The effective closure of the Strait of Hormuz has forced Saudi Arabia, the world's largest oil exporter, to cut production, with the United Arab Emirates, Kuwait, and Iraq taking similar measures.

Trump warned Iran on Monday against blocking oil shipments through the strait, stating that if Iran did so, "they will be hit by the United States twenty times more powerfully than so far." He added, "Furthermore, we will destroy those very vulnerable targets, making it virtually impossible for Iran to rebuild as a country—death, fire, and rage will come upon them—but I hope and pray that this will not happen!" Futures prices fell after G7 finance ministers stated their readiness to take any necessary steps to support global energy supplies, including releasing strategic oil reserves. However, France, as the current chair, stated that the G7 "has not yet" agreed to use emergency energy reserves, but will "continue to closely monitor the energy market situation and developments, and is ready to take necessary measures, including releasing reserves, to support global energy supplies."

War Casualties and Regional Situation

The United States reported its seventh casualty. Israel reported two soldiers and about a dozen civilians killed. UAE data showed a de-escalation in Iranian missile and drone attacks, but Tehran continues to regularly launch missiles at Israel and Gulf states. Drone and missile attacks have been launched.

According to official statistics, more than 1,300 people have died in Iran (data not updated for several days). The Lebanese Ministry of Health reported 486 deaths. Four civilians have died in the UAE, and two members of the armed forces died in a helicopter crash. Several other Gulf states have also reported deaths.

Israeli forces continue their attacks in southern Lebanon, aimed at weakening the Iranian-backed Hezbollah. NATO intercepted a ballistic missile launched from Iran towards Turkey on Monday, the second such incident, increasing the risk of the military alliance becoming more directly involved in the conflict.

On Sunday, Iranian media announced that Mojtaba Khamenei had been elected Supreme Leader in a “decisive vote” at a meeting of Iranian experts. The 56-year-old, closely associated with the Islamic Revolutionary Guard Corps, the most powerful military and economic body, has sworn complete obedience to the new leader.

Trump expressed dissatisfaction on Monday, saying Iran should have elected a leader "capable of doing things peacefully." He had previously called the election a "major mistake."

Geoeconomic analyst Dina Esfandiary said the new leader "shares many of the same ideological leanings as his father and will be committed to maintaining continuity, including in war." She added that the election "shows that Iran will not change its stance in the Middle East wars."

Saudi Arabia and Bahrain were again hit by projectiles overnight, and explosions were reported in multiple locations in Iran, including the capital Tehran. The Saudi Foreign Ministry warned on Monday that the operation in Tehran could lead to further escalation, with "Iran being the biggest loser." Saudi Arabia has recently increased its diplomatic engagement with Iran, but its tone has hardened.

The US ordered non-essential diplomatic personnel to leave Saudi Arabia on Monday, citing security risks.

Conclusion:

Overall, Trump's latest statements indicate an attempt to alleviate domestic economic pressure and global market volatility through energy policy adjustments while simultaneously pushing forward with a strong military posture.

However, the continued closure of the Strait of Hormuz, the strong signals from Iran's new leader, and the risk of multi-party conflicts in the region remain highly uncertain. The course of the war will continue to impact global energy security, economic stability, and the geopolitical landscape.

Middle East Conflict; Debt-ridden; Dollar on the Brink?

The escalating conflict in Iran is pushing up oil prices. The daily military spending of tens of billions of dollars and the $38 trillion national debt are exerting double pressure, causing the dollar to fall below its long-term upward trend. The risks of stagflation and recession are intertwined, making the future outlook uncertain. The ongoing conflict in Iran is causing nationwide gasoline prices to rise, while the US economy is mired in the double quagmire of war spending and a debt crisis—this war in Iran, costing nearly $1 billion a day, is pushing the already out-of-control US national debt to an even more dangerous edge.

Pre-war Warning: The Uncontrolled Fiscal Crisis of National Debt

Before the joint US-Israeli airstrikes on Iran, US finances were already on an unsustainable track, with the national debt expanding at an unprecedented rate.

Before the first wave of munitions against Tehran, federal debt had already surpassed the $38 trillion mark, and was projected to surge by $1 trillion in just two months from August to October 2025, setting a record for the fastest debt accumulation outside of the pandemic. The growth rate of US national debt has doubled since 2000, creating a huge hidden danger for the fiscal pressure of subsequent wars.

War Costs: The Burden of $1 Billion Daily in Military Expenses

Operation Epic Fury is generating astronomical military expenditures. This military operation costs an average of $891.4 million per day, and CNN, citing its report, indicated that $3.7 billion in military spending was consumed in the first 100 hours of the conflict alone.

The enormous expenses stem from the heavy deployment of air and naval forces: air operations cost an average of $30 million per day, and naval operations add another $15 million; maintaining the operational readiness of carrier strike groups requires an average of $6 million per day, and the deployment of equipment such as stealth bombers incurs millions of dollars in additional costs.

A two-month war could result in taxpayers bearing up to $95 billion in costs, further accelerating the pace of US debt accumulation.

Debt Malady: A Concentrated Outbreak of Multiple Hidden Dangers

Before the war, the US was already mired in a deep-seated debt crisis, with current annual government debt interest payments approaching $1 trillion, exceeding the combined expenditures on defense and healthcare.

The ongoing partial government shutdown not only adds billions of dollars in short-term costs but also brings core economic activity to a standstill. Credit rating agencies have downgraded the US's top credit rating due to political gridlock and fiscal decline.

Furthermore, the violent fluctuations in the global oil market triggered by the war have further impacted the fragile fiscal system—oil prices experienced their most volatile trading day in history, briefly touching $113 per barrel on Monday, and the uncertainty surrounding energy prices has further exacerbated the difficulty of fiscal planning.

Short-Term Shock: The Dilemma of Inflation and Interest Rate Cuts

The intertwining of war and debt presents an immediate shock to the US economy. The de facto blockade of the Strait of Hormuz has disrupted the logistics of 30% of global oil consumption and 20% of liquefied natural gas supply. If the conflict is resolved within weeks and energy infrastructure remains undamaged, oil prices may temporarily stabilize in the $100/barrel range.

This would push overall inflation up by 35 basis points in the coming months. The current situation of inflation consistently exceeding the policy target may force the Federal Reserve to postpone its interest rate cut plans for the year, thereby increasing debt repayment pressure.

Long-Term Outlook: The Economic Dilemma Under the Shadow of Recession

A more severe, prolonged conflict scenario would have catastrophic consequences. If the war drags on for months, oil prices could surge to $130/barrel. If a sustained supply shock causes oil prices to double this year, US real GDP growth would be dragged down by 1.5 percentage points.

This scenario would trigger a large-scale "uncertainty shock," suppressing business investment, freezing hiring, and forcing households to significantly reduce consumption.

Against the backdrop of high debt, the Federal Reserve may be forced to abandon its anti-inflation target and resort to aggressive interest rate cuts to rescue the economy, which will further weaken the dollar's credibility and push up debt financing costs. The impact of this continued shock will extend until the end of 2027.

Conclusion:

Endgame Dilemma: An Unsolvable Double Strangulation

The current financial markets remain relatively calm, primarily because the market generally believes that President Trump is highly sensitive to stock market sell-offs and will strive to avoid a prolonged conflict.

However, the reality is that war spending and debt growth have created a vicious cycle: the longer the war lasts, the more money is spent, the more frequent the borrowing, the higher the debt interest rates, and the narrower the fiscal space.

With the explosive growth of debt and the continued spread of the war, the US economy will face an extremely fragile balance in the coming months. The risks of recession and inflation are accumulating, and the Trump administration's economic predicament seems difficult to resolve easily.

The weekly chart of the US dollar index shows that it has repeatedly broken through its long-term upward channel and is currently barely holding onto the lower boundary of the channel.

Gold Prices on a Rollercoaster: The Logic of a Structural Bull Market Remains

Since March 2026, global financial markets have been on a rollercoaster ride. Gold, traditionally a safe-haven asset, has unexpectedly played a role in this round of escalating Middle East conflicts: while international oil prices rose nearly 30% on Monday (March 9), spot gold plummeted nearly 3% from its high, and although it subsequently rebounded, it still closed lower. On the surface, this seems to contradict the classic logic of "buying gold in times of turmoil." However, a deeper analysis of the current intertwined geopolitical, economic data, and monetary policy reveals that gold's short-term pullback actually hides a deeper structural logic, and its medium-term rebound potential may far exceed market expectations.

Escalating Geopolitical Conflicts: A Double-Edged Sword of Safe-Haven Demand and Inflation

The rapidly deteriorating situation in the Middle East has become the core trigger for this round of gold price volatility. The Israeli military launched a new round of attacks on central Iran and Beirut, Lebanon. Iran appointed Mojtaba Khamenei to succeed his father as Supreme Leader, with hardliners firmly in control and publicly pledging allegiance "to the last drop of blood." The Strait of Hormuz was effectively blocked, cutting off one-fifth of the world's oil and liquefied natural gas transport routes.

This energy supply disruption directly ignited global inflation fears. Soaring oil prices spread to broader commodity prices, with agricultural products and aluminum reaching multi-month or even multi-year highs.

Gold, which should have been a classic inflation hedge, performed differently: high inflation coupled with a significant postponement of Federal Reserve interest rate cuts strengthened the dollar's position. The dollar index touched a three-month high, making dollar-denominated gold more expensive for holders of non-dollar currencies, triggering selling pressure.

Inflationary concerns and interest rate hike expectations stemming from war uncertainty are suppressing gold prices, but if the conflict prolongs, safe-haven demand will continue to provide strong support. This triple squeeze of rising inflation, increased safe-haven demand, and an even stronger dollar is the fundamental reason for the short-term pressure on gold prices.

Macroeconomic Data and Fed Policy: Short-Term Negative Factors Dominate, Medium-Term Shift Key

The next Fed meeting is scheduled for March 17-18. The market generally expects interest rates to remain unchanged, and there are even doubts about the path of rate cuts in the second half of the year. Federal funds rate futures show that the probability of a rate cut in July has fallen to around 67%, with an expected total rate cut of only 38 basis points for the year.

Against this backdrop, gold's attractiveness as a zero-interest asset has significantly weakened. US Treasury yields have retreated slightly from their highs, but short-term yields are still rising, and the two-year and ten-year yield curve is flattening, indicating increased market concerns about stagflation risks. Last Friday's unexpectedly weak jobs report (non-farm payrolls decreased by 92,000, and the unemployment rate rose to 4.4%) should have been beneficial for gold, but it was overshadowed by the inflationary impact of soaring energy prices, leading investors to favor dollar cash rather than non-interest-bearing assets in the short term. Wyckoff warned that if this week's inflation data exceeds expectations, the Federal Reserve will face a dilemma of "controlling inflation vs. stabilizing growth," potentially causing gold prices to fall further.

However, this short-term pressure is likely just temporary "noise." Historically, geopolitical conflicts are often accompanied by liquidity panics and "sell the news" rallies at the beginning, but once the situation becomes clearer or prolonged, safe-haven funds will accelerate their return. Trump's repeated statements that the war "may be over soon" and "is basically very thorough," and his consideration of temporarily exempting some Russian oil sanctions to stabilize energy prices, briefly eased market panic, pushing oil prices down from their highs, stock markets rebounding, and the dollar's gains narrowing. This also led to a significant rebound in gold prices near the intraday low of $5015.

Gold's Medium-Term Outlook: The Structural Bull Market Logic Remains, $6000 is Not Out of Reach

Leaving aside short-term fluctuations, looking at the longer term, the structural upward logic of gold has not been broken. Since 2026, gold prices have accumulated a remarkable increase, breaking through the $5,000 mark and reaching a historical high of over $5,600 in January. Even with the current pullback, most institutions maintain a strong bullish stance. Investment banks such as J.P. Morgan predict gold prices could reach $6,300 by the end of the year, with some optimistic forecasts even pointing to higher levels. Core support comes from continued gold purchases by global central banks, the trend of de-dollarization, escalating geopolitical fragmentation, and a potential shift in monetary policy.

Currently, gold prices are consolidating in the $5,000-$5,200 range. If inflation data doesn't exceed expectations dramatically and the situation in the Middle East doesn't see a dramatic easing, gold is likely to resume its upward trend. Conversely, if the conflict escalates further, the Strait of Hormuz is permanently disrupted, inflation spirals out of control, and the Federal Reserve is forced to adopt a more hawkish stance, gold may face short-term pressure, but its dual attributes as a safe haven and inflation hedge will drive prices higher in the medium term.

Conclusion:

In summary, this is not the end of the gold bull market, but rather a "deep shakeout in turbulent times." Short-term investors should be wary of further increases in the US dollar and US Treasury yields, but for medium- to long-term investors, this pullback presents a rare opportunity to buy at lower prices. Amidst the triple whammy of geopolitical risks, inflationary concerns, and currency uncertainty, gold remains one of the most solid "easy money" assets.

Oil Prices Collapse: A Double Whammy for Both Bulls and Bears, Market Losses by 20% Instantly!

At the beginning of last week, crude oil prices surged 31% to $113.28 before plummeting 20% ​​to $80 due to the G7's release of reserves to rescue the market. With the Middle East conflict and policy intervention intensifying, can the subsequent oil price trend reverse the situation?

The US-Israeli military action against Iran continues to impact the Gulf energy supply chain. Crude oil production in southern Iraqi oil fields has plummeted, with exports falling from over 3.33 million barrels per day before the war to 800,000 barrels per day. Coupled with the paralysis of tanker traffic in the Strait of Hormuz, global crude oil supply has suffered a severe blow, directly pushing international oil prices sharply higher.

US dollar crude oil touched $113.28, while Middle Eastern Murban crude oil surged to over $120 per barrel, and panic rapidly spread in the oil market.

G7 Holds Emergency Meeting to Finalize Joint Reserve Release Plan

To curb runaway oil prices and alleviate supply shortages, major global economies have urgently activated their strategic petroleum reserve release plans.

According to the Financial Times, G7 finance ministers will hold an emergency teleconference on Monday to coordinate a joint release of emergency oil reserves within the framework of the International Energy Agency (IEA). The meeting is scheduled for after 8:00 PM Beijing time and will focus on assessing the impact of the conflict on the energy market.

Currently, three G7 countries, including the United States, have explicitly supported the joint release. US officials have proposed releasing 300 to 400 million barrels of reserves, representing 25% to 30% of the total reserves (1.2 billion barrels) of the IEA's 32 member countries. The IEA's strategic reserve system is a core emergency mechanism for responding to the global oil price crisis.

Divergent Attitudes Among Countries: Japan and France Follow Suit, South Korea Remains Observe

The French government has confirmed that G7 finance ministers will formally advance the joint reserve release plan at Monday's meeting.

In Asia, Japan's Ministry of Economy, Trade and Industry has instructed its domestic oil reserve agencies to prepare for the release of reserves, while simultaneously surveying refiners to assess domestic supply and demand, in preparation for a prolonged and normalized blockade of the Strait of Hormuz. Ten national oil reserve bases in Japan are on standby.

Compared to the proactive actions of Europe, the US, and Japan, South Korea has adopted a relatively cautious approach. Presidential Policy Secretary Kim stated that discussions on releasing oil reserves are not yet underway.

Conclusion:

From a crude oil trading perspective, the clear signal of a joint G7 reserve release has quickly suppressed oil price increases, with both Brent and WTI crude oil prices falling sharply.

In the short term, large-scale reserve releases will directly fill the supply gap in the Middle East and significantly dilute market speculative premiums. The medium- to long-term oil market trend will still depend on the progress of the restoration of navigation in the Strait of Hormuz, the actual pace of the G7 reserve releases, and the subsequent evolution of the Middle East conflict. These three factors will be the core variables dominating crude oil trading strategies.

From a technical perspective, US crude oil futures have largely completed the measured upward movement of the descending wedge pattern. Currently, influenced by the wide fluctuations in crude oil futures, oil prices may continue to fluctuate in the short term. However, due to the very low demand elasticity of crude oil prices, reduced supply will likely continue to drive prices higher before a subsequent rebound.

Overview of Important Overseas Economic Events and Matters This Week:

Monday (March 16): UK March CBI Retail Sales Balance (March 16-23); US March New York Fed Manufacturing Index; US February Industrial Production MoM (%); US January Seasonally Adjusted New Home Sales (10,000 units)

Tuesday (March 17): Australia March Cash Rate (%); Eurozone March ZEW Economic Sentiment Index; US February Import Price Index MoM/YoY (%); US February Seasonally Adjusted Pending Home Sales Index MoM (%)

Wednesday (March 18): Japan February Goods Trade Balance - Unadjusted (billion yen); Eurozone February Harmonized CPI YoY - Unadjusted Final Value (%); US February PPI YoY (%); US EIA Crude Oil Inventory Change for the Week Ending March 13 (10,000 barrels)

Thursday (March 19): Bank of Japan Policy Benchmark Interest Rate (%); Australia's February seasonally adjusted unemployment rate (%); Australia's February employment change (thousands); UK's January unemployment rate - by ILO standard (%); UK's March Bank of England benchmark interest rate (%); US initial jobless claims for the week ending March 14 (thousands); Eurozone's March ECB main refinancing rate (%).

Friday (March 20): Eurozone's January seasonally adjusted trade balance (billions of euros); US January building permits month-on-month rate revised (%)

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