The core factor influencing oil prices recently remains the geopolitical dynamics between the United States and Iran. The interplay regarding a ceasefire agreement, the Iranian nuclear issue, and the Strait of Hormuz blockade continues to be the market's primary focus, dictating the direction and magnitude of oil price movements.
Regarding ceasefire negotiations, Iran submitted a "14-point proposal" response to the U.S. via Pakistan a week ago, focusing on ending hostilities and Strait security. The proposal appears to consist of three stages: first, transforming the 30-day temporary ceasefire into a permanent one; second, halting discussions on uranium enrichment for 15 years and gradually lifting economic sanctions on Iran; and third, establishing a regional security system by Iran. This indicates that Iran's current demands, consistent with our previous analyses, remain centered on these three issues, which still conflict with U.S. objectives. Consequently, former U.S. President Trump promptly dismissed the proposal as "completely unacceptable," and Israel suggested it might take further action against Iran, potentially leading to renewed uncertainty.
On the nuclear issue, there seemed to be a slight shift last week. The U.S. has previously stated that Iran possessing nuclear weapons is absolutely unacceptable, a stance that had stalled negotiations—a core conflict between the two sides. However, Iran's recent proposal explicitly stated that, while it remains unwilling to completely dismantle its nuclear facilities or ship enriched uranium abroad, it is willing to dilute it under international supervision. In the latest exchange, Trump also indicated acceptance of Iran suspending its nuclear program for 20 years. This change in attitude, though not yet a breakthrough, suggests that both parties have moved from posturing to discussing substantive issues. This implies that even if significant progress remains difficult, the negotiation process is advancing.
Concerning economic compensation and the Strait blockade, Iran continues to leverage control of the Strait for economic gain, but there are signs of partial recovery in transit. According to Iranian state media, starting from last Wednesday evening, approximately 30 vessels were permitted by Tehran to transit the Strait of Hormuz, a significant increase from the previous daily average of fewer than 10 ships. This change may be linked to Iran's recent conciliatory signals or reflect practical considerations for stabilizing energy export channels amid economic pressure. However, it is noteworthy that this increase in traffic was not accompanied by an official policy adjustment announcement regarding Strait control, casting doubt on its sustainability. Simultaneously, as supertankers depart the Persian Gulf, more energy traders are signaling a gradual recovery in supply, which may exert downward pressure on oil prices.
Overall, the geopolitical situation between the U.S. and Iran remains the dominant factor influencing oil prices. Regarding the ceasefire, although the Lebanon-Israel truce was extended, its effectiveness and impact are relatively limited. Given the persistent possibility of U.S.-Israeli military action against Iran, this factor is unlikely to subside soon. On the nuclear issue, despite historical shifts in rhetoric, tangible progress remains low, with little chance of near-term improvement. Economically, Iran's control over the Strait persists. Although multiple vessels were allowed passage last week, the lack of an updated official management policy suggests this may be a temporary, isolated incident rather than a trend. Therefore, based on these three points, the U.S. and Iran are unlikely to reach an effective agreement soon. Particularly after the U.S. rejected Iran's proposal last Friday, the potential for escalated conflict remains, keeping market sentiment highly sensitive to any subtle changes in diplomatic interactions—be it a high-level call, a joint statement, or even unconfirmed diplomatic rumors—any of which could trigger daily oil price fluctuations exceeding 3%. Consequently, for futures trading, short-term, tactical positions are advisable over heavy holdings or bets on unilateral trends. In options, cautiously allocating out-of-the-money options may capture potential gains from directional shifts. For reference only.
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