The situation in the Middle East has continued to escalate over the past week, prompting a swift response in the oil market. Brent crude rose to $101.09 per barrel on Wednesday, up 3.2% on the day—the first time in six weeks it has closed above $100; WTI crude stood at $96.27. As spot prices climbed, bullish bets on oil in the futures market also increased significantly.
Escalating tensions push oil prices higher
The immediate backdrop to this rally is the rapid escalation of events related to Saudi Arabia and Iran. Saudi officials stated that Houthi militants attacked Saudi oil facilities early Tuesday, injuring 73 people. Meanwhile, the U.S. Central Command destroyed five Iranian tankers on the same day, following strikes against three additional tankers on Saturday, citing retaliation for Iran’s ballistic missile attack on a U.S. warship.
Following an increase in geopolitical risks, the market has begun reassessing the possibility of disruptions to crude oil supply. The price breaking through key integer levels has further strengthened short-term bullish sentiment.
Predicting a market shift to bullish
In a Myriad crude oil contract, the market is betting on whether crude oil will reach $120 first or drop to $55 first. The probability on the $120 side has risen to 56.5%, an increase of 15.1 percentage points from此前. Since early September, the bullish side has surpassed the $55 side and has not retreated since. The total trading volume in this market since March has reached approximately $12.7 million.
The WTI September target price contract on Polymarket has also been revised upward:
- The probability of WTI reaching $100 this month has risen to 59%.
- The probability of reaching $105 has increased to 30%.
- The probability of reaching $90 has increased to 71%.
In contrast, positions betting on a decline in oil prices have clearly cooled down.
The probability of the downside target has clearly decreased.
On Polymarket, the probability of WTI falling to $85 this month has decreased by 33 percentage points to 39%, with the probabilities for lower price contracts generally falling into single digits. As for the extreme downside target of $55, it now stands at just 1% in Polymarket’s September contract.
However, the contract designs of the two platforms are not the same. Myriad’s contract asks which target price crude oil will reach first, with no fixed deadline; Polymarket, on the other hand, specifies whether the relevant price will be reached by the end of September. Therefore, the probabilities offered by the two platforms cannot be directly compared.
Fuel prices rise in tandem
Rising oil prices are now being passed on to end markets. The U.S. average diesel price rose to $5.94 per gallon on Wednesday, setting a new record, while the average gasoline price stood at $4.22 per gallon. Continued increases in fuel costs suggest that energy prices may once again become a key economic issue ahead of the U.S. midterm elections.