Crude Oil: Weekend Hostilities Cool Down, Oil Prices Retreat
As of this afternoon's close, the main crude oil futures contract on the Shanghai International Energy Exchange fell by 8.55%, settling at 542.1 yuan per barrel. Over the weekend, the US refrained from attacking Iran for two consecutive days, and Iran suspended its retaliatory strikes, providing a brief respite in geopolitical tensions. This led to oil prices giving back some of their gains from last week.
US-Iran Suspension of Mutual Strikes, Geopolitical Panic Quickly Fades
The core driver of this round's oil price rally was the expectation of supply disruptions stemming from the escalation of the US-Iran military conflict. Last week, Brent crude broke through the $100 mark, largely pricing in extreme scenarios of sustained shipping blockages in the Strait of Hormuz and tightened Iranian crude exports. Today, the market received key signals of a de-escalation: the US has suspended airstrikes on targets within Iran, and Iran has simultaneously stated that as long as the US stops its military actions, it will suspend its retaliatory measures, opening a window for negotiations between the two sides. Following this news, the extreme panic expectations of a Strait blockade and full-scale war quickly subsided, and the geopolitical risk premium previously factored into oil prices began to be unwound in a concentrated manner. Speculative funds rapidly exited long positions, and safe-haven buying turned into profit-taking, becoming the most direct trigger for today's sharp decline in oil prices.
On the fundamental side, signs of de-escalation in the US-Iran conflict on the supply front have, to some extent, eased market concerns and alleviated expectations of supply disruptions. On the demand side, the US summer driving season continues to boost fuel consumption, but this is only a localized seasonal positive factor. The pace of global demand recovery is slow, and high oil prices are clearly suppressing demand. On the inventory front, the global low-crude-oil-inventory structure remains intact, providing underlying support for fundamentals.
Looking Ahead
In the short term, oil prices have shifted from a "geopolitically driven one-way market" to a "fundamentals + geopolitical maneuvering" volatile consolidation pattern, with an unclear trend direction. On one hand, the suspension of mutual strikes between the US and Iran is still a temporary de-escalation, and the two sides have not reached a substantive agreement. Iran remains skeptical of US intentions, and the risk of subsequent conflict recurrence persists. The geopolitical premium is unlikely to disappear entirely, and the risk of supply disruptions remains unresolved. At the same time, the US has indicated that negotiations with Iran are still possible in the near term. It is important to note that if US-Iran relations take a surprising turn for the better, oil prices could also face a rapid downside risk.
In terms of operations, the long-position strategy recommended for profit-taking earlier has effectively avoided this round of correction. At the current price level, it is not advisable to rush into buying the dip or blindly chase the sell-off. The recommended approach is to wait and see, focusing on three core variables: first, substantive progress in US-Iran negotiations, to confirm whether the ceasefire is a temporary buffer or a trend towards de-escalation; second, the production increase decisions and wording from the OPEC + meeting; and third, the recovery of demand, as high oil prices create negative feedback that limits the upside for oil prices. Once the situation becomes clearer, positions can be established based on the rebalancing of fundamentals and geopolitics. The overall assessment is that oil prices will likely enter a high-level volatile range, with volatility potentially decreasing compared to the previous two weeks, but risk control on positions remains crucial.
Risk Warning
Escalation of the US-Iran conflict into a full-scale war, or a significant easing of the situation through diplomatic mediation.