On May 13, a notable development emerged in the international crude oil market as the physical crude oil premium, which had previously exceeded Brent by over thirty dollars, retreated sharply. Some grades have now largely aligned with the benchmark price or even fallen into discount territory. GTC Zetahui Capital noted that while supply risks in the Strait of Hormuz have not completely dissipated, physical buyers have effectively alleviated short-term pressures by delaying purchases, drawing down inventories, and releasing strategic reserves. Consequently, short-term pricing in the market is leaning more toward supply-demand elasticity rather than geopolitical risk, with market sentiment turning marginally cautious. From a structural perspective, the recent premium decline results from a combination of factors. Crude oil imports by major Asian importers have seen a significant drop, with some refineries entering maintenance periods earlier than scheduled. Concurrently, U.S. crude oil exports continue to hit record levels. These factors together have notably eased tightness in the physical market. GTC Zetahui Capital believes the current price correction reflects more the elasticity on the supply side rather than a genuine retreat of geopolitical risks. The market remains in a critical phase of supply-demand tug-of-war, warranting continuous tracking of spread structures and forward curve changes, with potential volatility in market dynamics likely to persist. Analysts anticipate that this period of calm may not last long. As the summer travel peak approaches, global refinery operating rates are expected to gradually recover, and inventory buffers will be rapidly depleted. Should uncertainties surrounding the Strait of Hormuz persist, both physical and paper oil prices could face renewed volatility. Market participants are advised to monitor marginal changes in inventory data and shipping indicators to navigate market rhythms. Institutions caution that the evolution of geopolitical events is non-linear, and participants should conduct stress tests accordingly. Currently, according to GTC Zetahui Capital's assessment, short-term oil prices may maintain a range-bound pattern, but potential risks of medium-term supply tightness should not be overlooked. Investors should closely monitor policy moves by major oil-producing nations, progress in geopolitical negotiations, and the pace of strategic reserve releases. By leveraging price correction processes, they can capture structural opportunities while managing position timing, risk exposure, and establishing hedging mechanisms.
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