Market View On Tuesday, oil prices maintained a slight upward drift within a narrow range as the market adopted a wait-and-see stance. Investor concerns persist over a potential resumption of hostilities between the U.S. and Iran. The significant uncertainty surrounding the geopolitical developments between the two nations provides limited market direction, forcing investors to remain patient for a clear resolution.
Former President Trump halted strikes against Iran, stating he agreed to give Iran an additional 2-3 days for consideration. In response, Iran claimed the U.S. was framing "threats" as "opportunities for peace" and stated its readiness to counter any military aggression, asserting that Iran has never initiated war nor left the negotiating table. Iran warned that a new "front" would be opened if attacked again. Negotiations have made little progress, with Iran holding firm to its core demands, which remain significantly beyond what the U.S. is willing to accept. These demands include ending hostilities, obtaining economic relief, receiving war reparations, and playing a supervisory role in the strategic Strait of Hormuz. Furthermore, a clear divergence remains regarding the U.S. demand for Iran to shut down or long-term suspend its nuclear program. While Trump previously stated he would not concede in talks with Iran and threatened immediate large-scale military strikes if an acceptable deal wasn't reached, reports suggest the U.S. and Israel have been preparing for a new round of strikes against Iran in the coming days, with some sources indicating an attack could occur as early as next week.
Signs of tightening and depleting crude oil supply are becoming increasingly evident. Data shows Iraq's April crude oil exports have plummeted to just one-tenth of pre-war levels. The latest API data revealed a substantial draw of 9 million barrels in U.S. crude inventories, indicating an acceleration in the stockpile decline. Last week's draw from the U.S. Strategic Petroleum Reserve (SPR) hit a record high, pushing total inventories to their lowest level in two years. This follows comments from IEA Executive Director Fatih Birol, who stated that commercial oil stocks are being drawn down rapidly, leaving only weeks of supply. Consequently, any geopolitical developments potentially affecting supply are causing market jitters.
Time is running out for Trump to allow the stalemate with Iran to persist. While Iran appears to have made minor concessions, its core, principled demands are unlikely to see further compromise. It is difficult to envision how these points of divergence could be reconciled in an agreement. Whether Trump agrees to these terms will be pivotal in determining the trajectory of U.S.-Iran hostilities. The answer is expected in the coming days. The uncertainty surrounding the geopolitical landscape is likely to trigger sharp volatility in oil prices. Market participants are advised to carefully manage their trading pace and strengthen risk controls.
Daily Market Movements 1. WTI crude futures fell by $0.23, or 0.22%, to settle at $104.15 per barrel. Brent crude futures declined by $0.82, or 0.73%, to settle at $111.28 per barrel. INE crude futures rose by 2.4%, closing at 690 yuan. 2. The U.S. Dollar Index gained 0.33% to 99.31. The USD/CNH rate on the Hong Kong Exchange rose 0.03% to 6.7925. The U.S. 10-Year Treasury yield decreased by 0.51%, with the note price at 108.73. The Dow Jones Industrial Average fell 0.65% to 49,363.88.
Recent Developments 1. U.S. Strategic Petroleum Reserve Draw Hits Record High, Total Inventory Drops to Two-Year Low * Data released by the U.S. Department of Energy on Monday showed a record weekly draw of 9.9 million barrels from the SPR, reducing total stocks to approximately 374 million barrels, the lowest level since July 2024. * In response to oil price spikes triggered by the Iran conflict, the Trump administration is seeking to release 172 million barrels from the reserve under a global agreement. Last week, about 53.33 million barrels were allocated, marking the highest weekly allocation this year. * IEA Executive Director Fatih Birol stated that commercial crude inventories are depleting rapidly due to the Iran war and the effective blockade of the Strait of Hormuz, leaving only a few weeks of supply. The latest IEA monthly report noted that observed global oil inventories fell at a record pace in March and April, declining by a combined 246 million barrels.
2. Iraq's April Crude Exports Plunge 46.9% Amid Strait of Hormuz Disruption * Iraq's Oil Ministry issued a statement on the 18th, announcing that the country's crude oil exports in April plummeted to approximately 9.88 million barrels, a 46.9% decrease from about 18.60 million barrels in March. * Citing statistics from the State Organization for Marketing of Oil (SOMO), the statement indicated that Iraq's crude export revenue for April exceeded $1.087 billion. * Data shows Iraq's crude exports in March were about 18.60 million barrels, a drop of over 80% from approximately 99.87 million barrels in February. March export revenue was about $1.9 billion, significantly lower than the over $6.8 billion in February. * The near-total halt of traffic through the Strait of Hormuz, a critical global energy trade chokepoint, due to the U.S.-Israel-Iran conflict, has led to a sharp reduction in Iraq's crude exports in recent months.
3. Iranian Deputy FM Outlines Proposal to U.S., Includes U.S. Troop Withdrawal from Region * According to reports from IRNA and Reuters on the 19th, Iranian Deputy Foreign Minister Ali Bagheri Kani briefed a national meeting on the current negotiation process with the U.S. and Iran's response to the American draft proposal. * Bagheri Kani stated that Iran's recent proposals explicitly emphasize Iran's right to peaceful nuclear energy use, demand an end to war on all fronts including in Lebanon, call for the lifting of the U.S. naval blockade on Iran, the return and unfreezing of Iranian assets, compensation from the U.S. for war damages and reconstruction costs, the termination of all unilateral sanctions, and the withdrawal of U.S. forces from areas surrounding Iran.
4. Middle East Conflict Drives Up Import Costs, India Raises Fuel Prices Again * Rising crude costs due to the Middle East conflict have prompted India's state-run refiners to increase fuel prices for the second time in a week. In New Delhi, diesel and gasoline prices were raised by 1% and 0.9%, to 91.58 rupees and 98.64 rupees per liter, respectively. * Last Friday, India implemented its first fuel price hike in four years, pushing prices to their highest level since May 2022. India is heavily reliant on energy imports from the Middle East, and the oil price surge is placing significant pressure on its economy. * The U.S. has issued new waivers allowing purchases of Russian oil, which India has relied upon to fill supply gaps. Despite last Friday's 3% price increase in New Delhi, it remains modest compared to Brent crude's 50% surge, leaving retailers facing substantial losses. * A sharp depreciation of the rupee has exacerbated economic difficulties. An Indian Petroleum Ministry official stated on Monday that the three major state-run refiners are selling fuel below cost, incurring a daily loss of 7.5 billion rupees (approximately $78 million). Fuel prices vary across the country due to differences in local taxes.
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