Market View On Wednesday, oil prices dropped sharply by over 5% during the day, reaching new lows for May. Influenced by various factors surrounding the US-Iran negotiation process, oil prices exhibited significant volatility throughout the week. Iranian state television reported that a "preliminary informal document" regarding the framework of a memorandum of understanding between Iran and the United States had been disclosed. According to the draft memorandum, the US military would withdraw from areas surrounding Iran and lift the maritime blockade. In exchange, Iran would gradually restore commercial vessel traffic through the Strait of Hormuz to pre-escalation levels within one month, excluding military vessels. The management of vessel passage and route arrangements would be coordinated jointly by Iran and Oman. This news further heightened expectations for an agreement, leading to an immediate and sharp decline in oil prices driven by quantitative funds. In fact, most of these details had already been revealed by Iranian officials on Monday and do not represent the latest developments. Such market behavior indicates that participants are highly sensitive to progress in US-Iran negotiations, suggesting a clear case of overreaction. Later, the White House stated that the content of the memorandum published by Iranian media was completely fabricated, emphasizing that negotiations on the Iran issue are progressing smoothly and that former President Trump had clearly defined red lines. Trump expressed dissatisfaction with the potential US-Iran agreement and again hinted that any deal might depend on more Middle Eastern countries joining the "Abraham Accords." In response, the head of Iran's National Security Committee stressed that Iran would not back down due to Trump's remarks and would "adhere to red lines" in negotiations with the United States. Trump claimed that Iran misjudged the situation, believing he would fear the political consequences of war, and warned ally Oman that non-compliance would result in severe consequences. He emphasized that no country could control the Strait of Hormuz, stating the US would oversee it, and that the strait would be opened immediately upon reaching a framework agreement. From the progress of US-Iran negotiations this week, the points of divergence highlighted by both sides on Monday have not changed significantly. The demands reportedly made by Iran on Monday are difficult for Trump to accept, which is why he stated he is in no hurry to reach an agreement. The initial market interpretation of today's news as an imminent agreement was clearly a misunderstanding; it does not represent the latest developments but rather Iran's interpretation of the memorandum and its own bottom line. To some extent, this news indicates that a significant gap remains between the US and Iran in reaching an agreement. Amid a flood of information surrounding US-Iran negotiations, oil price movements suggest the market still holds high expectations for a deal. Although both sides have expressed strong stances, their clear desire for a ceasefire is well-known. While publicly maintaining tough positions, both are making concessions behind the scenes. This is the main reason investors remain inclined to believe an agreement will be reached despite evident disagreements. However, given the clear differences, negotiations still face considerable uncertainty. The prolonged closure of the Strait of Hormuz, coupled with ongoing supply shortages and deadlocked talks, makes it difficult for oil prices to decline significantly further. It is not advisable to continue shorting at current levels. The uncertainty in geopolitical developments may lead to sharp fluctuations in oil prices. It is recommended to maintain patience, await final outcomes, carefully manage timing, and strengthen risk control. Appendix: Key Points of Disagreement in US-Iran Negotiations:
Daily Updates 【1】WTI crude oil futures fell by $5.21, or 5.55%, to close at $88.68 per barrel; Brent crude oil futures dropped by $4.42, or 4.57%, to settle at $92.25 per barrel; INE crude oil futures declined by 3.22%, closing at 585.4 yuan. 【2】The US dollar index rose by 0.08% to 99.23; the Hong Kong Exchange's USD/CNY rate fell by 0.04% to 6.772; the US ten-year Treasury yield decreased by 0.23% to 109.63; the Dow Jones Industrial Average gained 0.36%, closing at 50,644.28.
Recent Developments 【1】【Japanese Media: Global Crude Oil Inventories Approach "100-Day Warning Line"】 The *Nihon Keizai Shimbun* recently published an article reporting that, according to calculations by Goldman Sachs Group, global crude oil inventories may fall below the equivalent of 100 days of global demand as early as the end of May. The article summarizes: Goldman Sachs estimates that as of the end of April, global crude oil inventories were equivalent to approximately 101 days of global demand, and are expected to drop to 98 days by the end of May. Among these, "visible inventories" observable via satellites and other means are projected to be only 73 days of demand, lower than the 74 days in 2025 and the lowest since related statistics began in 2018. Meanwhile, by the end of May, "invisible inventories," primarily in non-OECD countries and difficult to observe, are estimated to be equivalent to about 25 days of demand. Against the backdrop of slow supply recovery, the global crude oil market continues to deplete inventories to fill the gap. Although market expectations for the early reopening of the Strait of Hormuz have increased, in reality, only a few vessels can pass through the strait daily, resulting in a global crude oil supply loss of over 10 million barrels per day. 【2】Iranian Revolutionary Guard Official: Likelihood of Resuming War with US "Low" According to Iran's Tasnim News Agency on the 27th, Iranian Islamic Revolutionary Guard Corps Navy official Mohammad Akbarzadeh stated that the possibility of resuming war with the United States is "low," but Iran's armed forces are "fully loaded and prepared." The political deputy of the Iranian Islamic Revolutionary Guard Corps Navy stated that the US attempts to deal with Iran through threats and pressure, but the Iranian people will not accept "threatening language." He claimed that in the so-called "post-war period," Iran has demonstrated a new national image to the world, proving that "the enemy is not as powerful as its propaganda suggests." The official also stated that the US has suffered a "strategic failure" on the issue of "reopening the Strait of Hormuz." He said the US claimed it could restore navigation through the strait but "failed to achieve its goal" after the strait was blocked. Additionally, the official stated that Iran's armed forces are prepared and warned that "from Chabahar to Mahshahr will become the graveyard of aggressors," adding that "severe retaliation" would be carried out against "hostile forces." Iran's National Security Committee member Boroujerdi stated that, according to the preliminary draft agreement between Iran and the US, the US would commit to a comprehensive 60-day ceasefire on all fronts in the first phase, particularly within Lebanon. Advisor to Iran's Supreme Leader: The Strait of Hormuz is the real guarantee for any agreement with the United States. This time, our bottom line is very clear; no potential agreement can be guaranteed by documents and signatures alone. 【US Locks New Iranian Targets in Preparation for Resuming Strikes】 US officials revealed to the media on the 27th that the US Department of Defense has compiled a list of targets within Iran in preparation for possible resumed military action by former President Trump. However, analysts note that if the US launches new strikes, the difficulty would be greater than before. According to NBC News, the Pentagon is considering naming the potential renewed military operation "Big Hammer," with targets including nuclear facilities already attacked by the US in June last year, such as the Natanz and Isfahan nuclear sites. The US military may also strike Iran's strategic oil facilities on Kharg Island, as well as power plants, military command centers, and communication facilities. According to informed sources, many previously struck targets in Iran are considered "low-hanging fruit" because they are "either stationary or not deeply buried in bunkers." However, targets like missile launchers and drones have become more concealed and difficult to access, making their location and precise targeting more challenging than before. 【3】【Preliminary Informal Document on Iran-US Memorandum of Understanding Disclosed】 According to Iran's "Mizan" news agency, affiliated with the judiciary, on the 27th, a "preliminary informal document" regarding the framework of a memorandum of understanding between Iran and the United States was disclosed, involving issues such as the Strait of Hormuz, regional military deployments, and future agreement arrangements. According to the document, the US commits to lifting the "maritime blockade" against Iran and withdrawing some military forces deployed around Iran. In exchange, Iran will gradually restore commercial vessel traffic through the Strait of Hormuz to pre-escalation levels within one month, excluding military vessels. The management of vessel passage and route arrangements will be coordinated jointly by Iran and Oman. The document indicates that if Iran and the US can reach a final agreement within 60 days, relevant content may be confirmed in the form of a binding United Nations Security Council resolution. The report stated that Iran emphasized it would not take any practical action before completing "verifiable" inspections. Trump: No Country Can Control the Strait of Hormuz; US Will Oversee It Former US President Trump stated on Wednesday local time that the Strait of Hormuz will be open to all and not controlled by any country, regardless of any agreement with Iran. Trump said: "We will oversee it, but no one will directly control it. This is part of our negotiation process." He did not specify what measures the US would take to ensure safe passage through the strait. Trump's remarks cast doubt on the possibility of an immediate breakthrough between the US and Iran. Previously, both sides indicated progress in recent days, leading to market optimism about reaching an agreement. The situation in the strait remains a key sticking point in the negotiations. Trump stated that the US is "not satisfied" with the outcome of talks aimed at ending the nearly three-month-long war and noted that "perhaps we need to revisit and finish this war," though he did not elaborate on whether this meant further military action. Trump also downplayed the possibility of lifting sanctions on Iran. "We are absolutely not talking about easing sanctions or releasing funds or anything like that; that's completely off the table," he said. Trump Warns Ally Oman: Non-Compliance Will Result in Severe Consequences Former US President Trump commented on Wednesday local time regarding reports of Iran and Oman jointly controlling the Strait of Hormuz, stating that Oman "will behave well" and rejecting any such mechanism, "otherwise we will have to bomb them." Iranian authorities proposed collaborating with Omani authorities to manage and regulate maritime traffic in the strait located between Iran and Oman. Meanwhile, Iran considered establishing a joint toll mechanism with Oman, but this proposal was opposed by the US. Addressing this proposal, Trump told reporters after a cabinet meeting: "No one can control the strait. The strait will be open to everyone," and the US will "keep a close eye on it." Trump added: "Oman will act like any other country, otherwise we'll have to bomb them. They understand that, so it'll be fine."
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