A sudden signal of potential dialogue between the United States and Iran sent shockwaves through oil markets, causing the Shanghai crude (SC) futures' main contract to plummet and hit the跌停板 (limit down) during the afternoon session. Market analysts largely attribute this sharp decline to a direct reflection of extreme volatility in international oil prices. The core driver is seen as a rapid contraction of the geopolitical "risk premium" that had been underpinning prices, triggered by unexpected signs of easing tensions between the U.S. and Iran. This was compounded by expectations of tighter macro liquidity and an already loose supply-demand fundamental backdrop, collectively amplifying selling pressure. Concurrently, a strengthening U.S. dollar further exacerbated the sell-off.
Reports emerged that former President Trump indicated over the weekend that Iran was engaged in "serious talks" with Washington, signaling a potential de-escalation with the OPEC member nation, leading to a 6% intraday plunge in WTI crude. Oil prices had previously touched six-month highs due to heightened U.S.-Iran tensions, with WTI trading near its highest levels since late September; both benchmark contracts retreated significantly today. Tony, an analyst at IG Markets, suggested that Trump's comments, coupled with reports that Iran's Revolutionary Guard Navy had no intention of conducting live-fire exercises in the Strait of Hormuz, were signs of cooling tensions. He stated, "The oil market interpreted this as an encouraging step back from confrontation, easing the geopolitical risk premium built up during last week's rally and triggering a round of profit-taking."
Analyst Sachdeva pointed out, "The recent pullback in oil prices has also been exacerbated by a strengthening U.S. dollar. A stronger dollar typically makes dollar-denominated oil more expensive for non-U.S. buyers, thereby putting additional downward pressure on prices." Chuanyuan Futures also noted that on the macro front, influenced by Trump's nomination of Kevin Warsh as a candidate for the next Fed Chair, expectations for tighter liquidity have led to a stronger dollar and sharp declines in metal prices, with oil experiencing a short-term plunge, warning investors to be cautious of liquidity risks.
Citing a Everbright Futures research report, the IEA believes the international oil market will face a surplus this year, with supply exceeding demand by as much as 3.85 million barrels per day, equivalent to about 4% of total global demand. In contrast, OPEC anticipates the global oil market will remain broadly balanced in 2026. The divergence between these two forecasts is at its widest in decades. The EIA revised down its 2026 demand growth forecast by 90,000 barrels to 1.14 million barrels per day, while projecting 2027 demand growth at 1.26 million barrels per day. The EIA further increased its forecast for the global crude and related liquids production surplus in 2026 to 2.83 million barrels per day.
Although OPEC+ member countries agreed to maintain their pause on production increases, holding output steady for March, and a statement from the organization affirmed that eight OPEC+ nations reiterated their commitment to market stability, citing a robust global economic outlook and healthy current oil market fundamentals with low inventory levels, Chuanyuan Futures expressed that, considering the current backdrop of global oil oversupply, it would be difficult for sentiment-driven premiums to sustain significant heights, making a sustained oil price rally challenging.
New湖 Futures commented that according to the latest news, Trump stated he hopes to reach a consensus with Iran, and Iran's Foreign Minister also expressed confidence in reaching a nuclear agreement with the U.S., leading to a significant price correction at the morning open. The impact of U.S. cold weather has diminished; the CPC pipeline is gradually resuming operations, while Kazakhstan's largest Tengiz field has restarted production. OPEC+ has currently paused output increases for Q1, with attention focused on the February 1st meeting decision regarding continuing the pause in March. Macro-wise, Trump announced the nomination of Kevin Warsh for Fed Chair, stating it was inappropriate to pressure Warsh on rate cuts and that cuts shouldn't require White House pressure; short-term oil price volatility may be high, and continued focus on Iran developments is crucial; any positive negotiation signals could lead to significant price corrections.
Everbright Futures believes that close attention must now be paid to the resonance of risks. The biggest variable on the supply side currently is whether the U.S.-Iran conflict remains contained or escalates into a爆发 (outbreak). Under a scenario of containment, the supply-demand balance sheet remains loose, meaning most of the geopolitical premium has already been priced in. However, under an escalation scenario, oil prices would still possess significant upside potential. In the short term, heightened volatility in precious metals against a backdrop of a weaker dollar warrants attention, as volatility in risk assets is also likely to amplify further.
Comments