Crude oil prices exhibited substantial volatility during Thursday's session. WTI futures surged above $100 per barrel overnight before sharply retreating by nearly $7, almost erasing the day's significant gains. This pullback followed Israel's announcement, aligning with former President Trump's request, that it would promptly initiate direct negotiations with Lebanon. However, prices ultimately rebounded to close higher for the day. The market is expected to remain cautious, with investors likely adopting a wait-and-see approach pending the outcome of US-Iran talks scheduled for Islamabad, Pakistan.
The White House confirmed on the 8th that the first round of US-Iran talks is set for the 11th in Islamabad. The prospects for these talks became uncertain after the US administration backtracked on its initial acceptance of Iran's proposed 10-point plan as a basis for negotiation—a key factor that had led Iran to agree to the talks. US Vice President Vance stated that Iran's 10-point proposal was immediately discarded and rejected. An Iranian deputy foreign minister indicated that the Iranian delegation would attend the peace talks in Islamabad contingent upon Israel ceasing its attacks on Lebanon. Earlier, the Iranian ambassador to Pakistan deleted a social media post suggesting the delegation's imminent arrival, hinting at potential complications. However, late Thursday, Israeli Prime Minister Netanyahu announced he had instructed the cabinet to begin direct talks with Lebanon as soon as possible, focusing on disarming Hezbollah and establishing formal peaceful relations, which revived hopes for the US-Iran negotiations.
Current statements from US officials suggest the country is unlikely to accept Iran's published 10-point proposal. The White House Press Secretary noted that Iran had modified its initial proposal into a more reasonable and streamlined plan, making a US agreement to a ceasefire possible. Mediators revealed late Wednesday that Iran had made several concessions on its original list, softening its stance on issues such as US troop withdrawal from the region, war reparations, and uranium enrichment. While significant differences remain, the mutual desire for a ceasefire may lead to compromises from both sides. Nevertheless, a clear assessment is difficult at this stage, and concrete results will likely only emerge after Saturday's negotiations.
The Speaker of Iran's Parliament warned that violating the ceasefire would incur definite costs and consequences. Following what Iran termed an Israeli "violation of the ceasefire," Iran intensified its control over the Strait of Hormuz, strictly limiting the number of vessels permitted passage. The primary factor influencing oil prices currently is the progress of the US-Iran ceasefire talks. Until a clear outcome is reached, the market is expected to maintain its观望 stance. From a medium to long-term perspective, the extensive damage from the ongoing conflict has already caused significant disruption to crude oil supply. Even if a ceasefire is agreed upon, market recovery will require considerable time. According to the EIA's Short-Term Energy Outlook, the crude oil market is projected to remain tight through 2026, with a pronounced supply shortage expected in the second quarter. A sustained sharp decline in oil prices is unlikely in the near term. Prices are anticipated to maintain high levels with wide fluctuations. Recent sharp declines may present buying opportunities. Given the current high volatility and substantial uncertainty, robust risk management and cautious participation are advised.
**Daily Market Movements** WTI crude futures rose by $3.46, or 3.66%, to settle at $97.87 per barrel. Brent crude futures increased by $1.17, or 1.23%, closing at $95.92 per barrel. INE crude futures edged up 0.25% to 632 yuan. The US Dollar Index fell 0.21% to 98.82. The Hong Kong Exchange USD/CNY rate rose 0.16% to 6.8083. The US 10-year Treasury yield increased by 0.14%, with the price at 111.36. The Dow Jones Industrial Average gained 0.58% to close at 48,185.8.
**Recent Key Developments** **1. Middle East Infrastructure Suffers Severe Damage Despite Ceasefire Talk; Supply Tightness Expected to Persist** 1. Although the ceasefire agreement between former President Trump and Iran has temporarily halted hostilities, dozens of refineries, oil fields, and LNG export terminals across the Middle East have been damaged by missile and drone attacks, making repairs extremely complex. Experts state they have "never seen destruction on this scale," indicating the global oil and gas market will face prolonged supply tightness. 2. Critical facilities are severely impacted: Approximately 17% of capacity at Qatar's Ras Laffan LNG base has been destroyed, with full restoration potentially delayed until 2030 and repair costs estimated around $10 billion. One production train at Shell's Pearl GTL facility will be shut down for at least a year. Kuwait's refining facilities are heavily damaged, requiring three to four months to restore full production; Bahrain's Sitra refinery has declared force majeure. 3. About one-third of the refineries in the Gulf region are damaged, with repairs expected to take at least several months. The International Energy Agency estimates over 40 key energy assets have been damaged, causing the largest supply disruption on record. Rystad Energy estimates repair costs could exceed $25 billion. Iraq, Saudi Arabia, and other nations have been forced to shut in approximately 7.5 million barrels per day of crude production, with sudden well shut-ins posing geological risks. 4. Supply chain bottlenecks are exacerbating repair challenges: Replacing customized transformers, valves, and gas turbines could take years, and a significant number of specialized engineers and welders have evacuated the region. Wood Mackenzie suggests repair costs will divert about $100 billion from the region's oil and gas investments this year, forcing delays in growth projects. 5. Consulting firm Eurasia Group anticipates oil prices will remain above $80 per barrel this year, even if hostilities cease. Following the ceasefire announcement, Brent crude fell to $95 per barrel but remains well above the pre-conflict level of $60. Damage to non-energy facilities, such as aluminum plants, is also expected to drive up metal prices.
**2. Singapore Fuel Oil Inventories Plunge to Ten-Week Low as Hormuz Strait Impasse Chokes Middle East Supply** 1. Data released Thursday by Singapore's Enterprise Development Board showed onshore residual fuel oil inventories fell 7.4% to 21.72 million barrels in the week ending April 8, hitting the lowest level in ten weeks. 2. The sharp inventory decline is primarily due to a significant contraction in fuel oil imports from the Middle East. Total weekly imports plummeted 31.9% week-on-week to approximately 625,000 metric tons, as most Middle Eastern tankers remain unable to reach port normally due to transit restrictions in the Strait of Hormuz. 3. Brazil replaced the Middle East as Singapore's largest fuel oil supplier for the week, with imports of about 88,600 metric tons. Steady arrivals from Brazil in recent weeks have somewhat alleviated market anxiety over supply tightness. 4. Examining specific trade flows, Malaysia was the top import source with about 154,600 metric tons, followed by Iraq and Brazil. South Korea and China were the primary destinations, receiving approximately 99,900 and 80,900 metric tons of exports, respectively. 5. Despite inventories falling below historical averages, the Singapore fuel oil spot price differential has softened in recent trading sessions, indicating market观望 regarding the potential for a swift resolution to the Hormuz Strait transit issues. 6. Analysis suggests that if the strait restrictions persist, the Asian fuel oil market will face the dual challenge of a Middle East supply gap and reliance on alternative supplies from Brazil. The low-sulfur fuel oil crack spread may experience wide fluctuations, caught between supply concerns and weak demand.
**3. Hormuz Strait Crisis Escalates, 230 Tankers Stranded, Raising Global Concerns** 1. The CEO of UAE's ADNOC, Sultan Al Jaber, stated clearly on LinkedIn Wednesday that the Strait of Hormuz is not currently open, with transit subject to restrictions,附加 conditions, and controls. 2. He emphasized that the strait is a natural waterway governed by international law, where transit passage rights should be guaranteed, and demanded its unconditional opening without any prerequisites. 3. Al Jaber warned that the longer the restrictions continue, the greater the impact on oil prices and supply chains, highlighting that restoring full, unimpeded navigation is key to market stability. 4. He further noted that energy security and global economic stability depend on the unconditional opening of the strait. Any attempt to weaponize this critical chokepoint is intolerable and would set a dangerous precedent for the world. 5. Estimates indicate approximately 230 laden crude oil tankers are currently stranded awaiting passage. About 80% of their cargo is destined for Asia, a region home to half the global population, making the urgency particularly acute there. 6. Analysts believe the Hormuz impasse, combined with recent demand concerns sparked by tariff-related comments from former President Trump, is subjecting the crude oil market to a dual squeeze from supply-side disruptions and macro risk-off sentiment. 7. The market is closely monitoring responses from Iran and naval movements. Each additional day of restricted transit exponentially increases supply delays, market tightness, and upward price pressure.
A report specifically highlighted that demand decline would be concentrated in Asia, which is highly dependent on Middle East crude supplies. Although the EIA expects global oil demand to rebound by 1.6 million barrels per day next year as supply flows normalize, the global energy market still faces a painful "long-tail recovery period" under the shadow of these disruptions.
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