As of the close this afternoon, the main crude oil futures contract on the Shanghai Energy Exchange showed strength, quoted at 689 yuan per barrel. The core logic is that geopolitical conflicts show little progress, with prolonged disruptions to supply as the conflicts continue. This has led to an acceleration in the drawdown of global inventories, making oil prices more prone to increases than decreases.
Geopolitical conflicts remain difficult to resolve, leading to continued constraints on energy supply. Recently, the Middle East geopolitical conflict is in a stalemate characterized by a cessation of hostilities but not a full ceasefire, asymmetric blockades, and a lack of progress in negotiations. The core disputes between the US and Iran regarding navigation in the Strait of Hormuz, maritime blockades, and nuclear issues show no signs of easing. The US has explicitly announced an indefinite extension of its maritime blockade of Iranian ports and the strait, insisting that concessions on Iran's nuclear program are a prerequisite for lifting the blockade and restarting talks. The US continues to intercept Iran-affiliated tankers, having intercepted nearly 40 vessels to date. Iran has responded firmly, asserting full control over strait passage, requiring foreign vessels to report and pay fees, and warning of "unprecedented military action" if the blockade persists. While internal divisions exist between diplomatic moderates and hardline military factions, overall, no signals of compromise have been emitted. As of April 30, the conflict has lasted 62 days, with crude oil traffic through the Strait of Hormuz remaining at a low level of less than 20%. From a geopolitical perspective, the US-Iran conflict continues to ferment and shows signs of escalation. The ongoing disruption to global crude oil supply and the continued contraction of effective supply keep geopolitical risk premiums elevated, directly supporting strong crude oil prices.
Global inventories are accelerating their drawdown, with a structural supply deficit pushing oil prices higher. OPEC's production in March decreased by over 7 million barrels per day compared to the previous month, with the timeline for supply returning remaining distant. Data from the US Energy Information Administration shows that total US crude oil inventories, including strategic reserves, stood at 857.419 million barrels, a decrease of 13.354 million barrels from the previous week. US commercial crude oil inventories were 459.495 million barrels, down 6.233 million barrels from the prior week. US gasoline inventories totaled 222.299 million barrels, falling by 6.075 million barrels. Distillate fuel oil inventories were 103.638 million barrels, declining by 4.494 million barrels. The EIA crude inventory draw recorded its largest since the week of February 13, 2026. The draw in EIA Strategic Petroleum Reserve inventories was the largest since the week of October 7, 2022. Global inventories have entered a cycle of accelerated drawdown, with both visible inventories and floating storage declining simultaneously. The fundamental supply-demand picture continues to provide strong support for oil prices, reinforcing the recent upward momentum.
Looking ahead, the fundamental trading logic in the crude oil market has not changed recently. The core issues remain unresolved supply-side problems and strong demand-side support. As several Middle Eastern oil producers have been forced to implement significant production cuts, and navigation through the Strait of Hormuz shows no improvement, recent hawkish statements from the US and Iran have heightened market concerns about an escalation of conflict during the holiday period, keeping oil prices firm. Meanwhile, it is important to note that WTI has already breached the $100 per barrel mark. Potential downside risks include the initiation of temporary ceasefire talks between the US and Iran, and negative demand feedback stemming from strengthened expectations of Federal Reserve interest rate hikes. However, overall, given that the strait navigation issue remains unresolved, downside support for oil prices is strong. The general outlook remains bullish, with a strategy of selling put options after former President Trump makes his characteristic comments. Risks include ceasefire talks exceeding expectations and an unexpected resolution to strait navigation issues.
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