For the First Time in Three Weeks, Brent Crude Price Breaks Through the $110 Mark
Brent crude oil price broke through the $110 per barrel mark on Tuesday, hitting a three-week high. The persistently uncertain prospects of U.S.-Iran negotiations have become the core driver behind the oil price rise. As the blockade of the Strait of Hormuz continues to escalate, the supply gap in the global energy market is expanding at a record pace, inflationary pressures are gradually spreading to the bond market, and the in-depth impact on the petrochemical industry chain may have just begun.
On Tuesday, Brent crude oil hit an intraday high of $112.70 per barrel, with a single-day increase of 4.1%, marking the first time the oil price has broken through the $110 mark in three weeks — the last time Brent traded above $110 was before Trump announced a temporary ceasefire on April 7. By the close of trading that day, Brent crude oil was quoted at $111.26 per barrel, up 2.8%; the U.S. benchmark West Texas Intermediate (WTI) crude oil closed at $99.93 per barrel, up 3.7%.
The core driver of the current oil price rise lies in the continued slow progress of U.S.-Iran negotiations. The White House stated on Monday that U.S. officials are reviewing the latest negotiation plan proposed by Iran, but emphasized that the Trump administration’s "red line" stance on any relevant agreement will not change. U.S. Secretary of State Rubio clearly stated that the nuclear issue remains the core topic of negotiations. Jim Reid, Head of Macro Research at Deutsche Bank, analyzed: "The market has been closely monitoring any positive signs related to the negotiations, and the lack of such signs is constantly intensifying market concerns about the breakdown of negotiations."
The continuous high oil price is rekindling market vigilance against inflation. On Tuesday, the UK 10-year government bond yield climbed to 5%, the first time it has reached this level since the end of March; the 30-year UK government bond yield rose to about 5.7%, approaching the highest level since the 21st century. At the same time, the U.S. 10-year Treasury yield rose by 2 basis points to 4.36%, and the German 10-year government bond yield also rose by 2 basis points to 3.06%, indicating an increasingly obvious trend of inflationary pressures spreading to the bond market.
Negotiations Stalled, Oil Prices Lose Downward Support
The situation in the Strait of Hormuz is the fundamental reason for the current surge in oil prices. Since the outbreak of the U.S.-Iran related conflict, Iran’s measures have almost brought oil transportation through the strait to a standstill, and it has also launched attacks on energy facilities in the Gulf region. Affected by this, Brent crude oil price has fluctuated and climbed from less than $60 per barrel at the beginning of the year, reaching a high of $119 per barrel.
After Trump announced a temporary ceasefire on April 7, oil prices once fell sharply, dropping to a low of $86.09 per barrel. However, as the progress of U.S.-Iran negotiations continues to be slow, market optimism has gradually faded, market sentiment has reversed again, and oil prices have re-entered an upward channel.
According to relevant disclosures, White House Press Secretary Levitt confirmed at a press conference on the 27th that President Trump and his national security team had held a meeting that day to specifically discuss the new negotiation plan proposed by Iran.
Reports show that Levitt stated on Monday that Trump has convened relevant national security officials to review the latest proposal submitted by Iran, and revealed that Trump will make a public statement on the plan "soon". Rubio reaffirmed that the nuclear issue "is the fundamental reason we are involved in all this and remains the core topic of negotiations", and refused to speculate on whether Trump will accept Iran’s plan of "delaying nuclear negotiations while opening the strait".
Intraday on Tuesday, the news that the UAE announced its withdrawal from OPEC once caused market fluctuations and narrowed the oil price increase, but this news did not change the overall upward trend of oil prices, and Brent crude oil finally closed with a significant increase.
At the same time, Brent crude oil price has been back above $100 per barrel for nearly a week, and market concerns about inflation are accelerating their transmission to the bond market. Jim Reid of Deutsche Bank said: "Given that Brent crude oil has been maintained above $100 per barrel for nearly a week, broader inflation concerns are clearly returning to the market agenda, thereby pushing the bond market lower."
The UK government bond market is particularly sensitive to the current energy price shock. The 10-year UK government bond yield rose to 5%, and the 30-year yield is approaching the highest level of the century. This trend indicates that the market is re-pricing longer-term inflation risks, and at the same time betting that central banks around the world will have to raise interest rates further to curb the continuous rise of inflation.
Record Supply Gap, Unprecedented Inventory Depletion Rate
Relevant market analysis shows that a report released by Goldman Sachs on April 26 pointed out that the daily crude oil production loss of about 14.4 million barrels in the Persian Gulf is driving the global oil inventory to be consumed at a rate of 11 million to 12 million barrels per day, a record high, and the daily consumption has exceeded Germany’s national average daily oil consumption.
From the perspective of the global oil supply and demand structure, the global oil market originally had a surplus of about 1.8 million barrels per day in 2025, but according to the current inventory consumption rate, it is expected that by the second quarter of 2026, the global oil market will have a supply gap of 9.4 million barrels per day — a reversal from surplus to shortage took only one quarter.
Mohit Kumar, Chief European Economist at Jefferies, warned: "The longer the Strait of Hormuz is blocked, the greater the negative impact on the global economy will be, and this impact will gradually penetrate into all industrial chain links."
Market analysis also points out that currently, many international institutions have raised their oil price expectations, and the upside risk of oil prices is significantly greater than the downside risk. Goldman Sachs has raised its forecast for Brent crude oil price in the fourth quarter of 2026 to $90 per barrel, and set a variety of scenario forecasts:
If the export of the Strait of Hormuz returns to normal between early May and mid-June, the average price of Brent crude oil in the fourth quarter of 2026 will be about below $80 per barrel; if the recovery is delayed until the end of July, the average price will exceed $100 per barrel; if the oil flow in the Strait of Hormuz cannot be restored to more than 70% of the normal level for a long time, the average price may be close to $120 per barrel.
Bank of America (BofA) gave a more radical judgment:
If the Strait of Hormuz maintains a fragile ceasefire state of "neither fully open nor fully closed", the average price of Brent crude oil in 2026 may reach $120 per barrel; if the U.S.-Iran conflict restarts and extends into the summer, the average price may reach $150 per barrel or even higher.
Citigroup, on the other hand, delayed the reopening time of the Strait of Hormuz under the baseline scenario to the end of May, and set the 0-3 month Brent crude oil target price at $120 per barrel.
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