Crude Oil Market Report

Price Trend Summary

Over the past two weeks, oil prices initially rose but later returned to previous levels. In the first week, the U.S. Treasury imposed sanctions on Iranian shipping, oil, and energy firms, prompting Iran to threaten closure of the Strait of Hormuz, a critical global oil transit route, fueling supply concerns and pushing prices up. However, prices later retreated as U.S. crude inventories increased and high-level talks between the U.S. and Russia signaled potential progress toward resolving the Russia-Ukraine conflict.

In the second week, oil prices briefly surged due to a drone attack on Kazakhstan's CPC pipeline and market speculation that OPEC+ might delay its planned production increase in April. However, easing Middle East tensions, reduced risk premiums, and U.S. pressure on Iraq to resume Kurdistan oil exports led prices back to equilibrium.

Crude Oil Data Update

Seasonal Demand Declines, EIA Inventories Continue to Rise

Over the past two weeks, commercial crude inventories increased by 8.7 million barrels, while SPR saw a marginal rise of 200,000 barrels, maintaining short-term supply pressure. In production activities, active rig counts increased by 2, while refinery utilization rebounded to 85%, signaling a gradual recovery in refining capacity.

On the product side, gasoline inventories fell by 3.2 million barrels, marking the first decline since 11/2024, while distillate stocks dropped by 1.9 million barrels, indicating a potential revival in downstream demand. Although rising crude inventories present a supply-side challenge, improved production and demand dynamics help balance the market. Future oil price movements will depend on policy adjustments, geopolitical risks, and global supply chain shifts.

Global Oil Market Supply-Demand Deficit Narrows, According to Latest Reports from Major Agencies

• EIA: Increased demand growth estimate by 40,000 bpd to 1.37 million bpd while lowering supply growth by 40,000 bpd to 1.72 million bpd, forecasting demand at 10,456 million bpd and supply at 10,414 million bpd, reducing the supply-demand gap.
• OPEC: Maintained demand growth forecast at 1.5 million bpd and lowered non-OPEC+ supply growth by 100,000 bpd to 1.1 million bpd, narrowing the supply-demand gap. The report also indicated a slight decline in OPEC production.
• IEA: Raised demand growth estimate by 50,000 bpd to 1.1 million bpd while keeping supply growth at 1.6 million bpd, further reducing the supply-demand gap.

Although demand has improved slightly, long-term price trends remain heavily influenced by supply-side factors. In the short term, geopolitical developments, particularly changes in Russian and Iranian crude exports, will be critical. Over the medium to long term, attention should focus on OPEC+ production policies and evolving U.S.-China trade relations.

Global Geopolitical Developments

Tensions between the U.S. and Iran have intensified in the energy sector. The U.S. has reinstated its "maximum pressure" policy, aiming to cut Iranian oil exports to zero to curb funding for Iran’s missile programs and affiliated militant groups. The U.S. Treasury sanctioned ghost fleets transporting Iranian oil to China and froze their assets in the U.S.

In response, Iran has taken aggressive countermeasures, including threats to block the Strait of Hormuz, a chokepoint for approximately one-third of global oil shipments. Any disruption could have severe consequences for global crude supply. The escalating confrontation between the U.S. and Iran has heightened volatility in energy markets and geopolitical risks, necessitating close monitoring of future developments.

Conclusion

Oil prices have experienced fluctuations driven by geopolitical risks and inventory data. While reports from the three major agencies indicate a narrowing supply-demand deficit, in the short term, Middle East tensions and U.S.-Iran relations will continue to dominate market sentiment, creating supply-side uncertainties. Over the long run, OPEC+ production strategies and U.S.-China trade relations will be key factors shaping oil price trends, warranting ongoing scrutiny.