Middle East risks escalate, oil prices surge to high levels

(1) Brent crude oil surged over 2%, poised to achieve the highest closing price since May, as rising Middle East conflict risks pushed oil prices higher. (2) Global oil inventories are at extremely low levels, leaving very limited buffer for supply disruptions. (3) The United States is deploying more warships, Israel is reportedly preparing for potential strikes against Iran, and attacks on Saudi Arabia are also intensifying. (4) The US has ordered non-essential US government personnel to evacuate Saudi Arabia. (5) At the market sentiment level, geopolitical risk premiums are being priced back into oil, and low inventories are amplifying the price elasticity of supply disruptions. (6) Going forward, the focus will be on whether military deployments and attacks further escalate, and how sensitive oil prices are to supply news amid low inventories.