Price Trend Summary

• Early in the first week's oil prices, after the failure of negotiations between the United States and Iran, the US immediately implemented a "physical blockade" against all vessels entering and leaving Iranian ports, while Iran claimed control of the Strait of Hormuz and warned that any US or allied warships approaching the strait would be considered in "violation of the ceasefire agreement" and face a "strong response," forming a de facto "dual blockade." This caused the risk of supply disruption to spike instantly, and the market quickly priced the geopolitical risk premium into oil prices, driving WTI and Brent crude up by more than 8% in a single day.
• In the mid-term, the White House released signals of restarting negotiations, noting that a second round of talks between the US and Iran was under discussion, and oil prices fell in response. Meanwhile, the EIA announced on Wednesday that US crude oil inventories decreased by about 900,000 barrels in the week ending April 10. The drop in inventories should have pushed up oil prices, but under the suppression of peace talk expectations, the bullish effect was quite limited. The market paid more attention to the direction of geopolitics rather than conventional supply and demand data.
• In the late stage, after Lebanon and Israel reached a 10-day ceasefire agreement, and Iran announced it would keep the Strait of Hormuz open to all commercial vessels during the ceasefire, international oil prices fell sharply on Friday, and the market risk premium rapidly dissipated. Trump also stated that Iran has agreed not to close the waterway in the future, further easing market concerns about supply disruptions. US WTI crude oil futures plummeted nearly 12% that day, closing at $83.85 per barrel. Brent crude fell by more than $20 from its peak in just one week.
• In the early stage of the second week's oil prices, because Iran reiterated that the US violated the ceasefire agreement, it again blockaded the Strait of Hormuz and refused to participate in the second round of negotiations in Islamabad, causing oil prices to rebound rapidly after the previous week's plunge, with Brent crude returning to $100/barrel.
• In the mid-term, stimulated by the dual news of a container ship being attacked and seized in the Strait of Hormuz and an unexpected drop in US fuel inventories, supply concerns intensified. In addition, Qalibaf, the chief negotiator responsible for Iran and the US, resigned. This move was seen as a symbol of the expansion of hardline forces in Iran. At the same time, the market also reported that air defense systems were activated over the Iranian capital, Tehran, to intercept targets. International oil prices rose sharply.
• In the late stage, affected by the news that the Iranian Foreign Minister is expected to arrive in Pakistan and that a US delegation will go to Iran for talks, the upward momentum of oil prices was further suppressed. However, judging from the performance of the whole week, Brent's cumulative increase was about 16%, and WTI also rose by nearly 13%. Although the ceasefire agreement has been extended at present, the situation remains fragile. Trump stated that Iran might redeploy some military forces during the two-week ceasefire, but the US military has the capability to quickly destroy relevant threats. At the same time, the US also announced an indefinite extension of the ceasefire to buy more time for negotiations. The market believes that in the absence of substantive progress in the talks, the ceasefire may evolve into a sustained low-intensity conflict.

Institutional Monthly Reports: IEA Significantly Downgrades Supply and Demand Growth Forecasts, OPEC Maintains Estimates Unchanged

IEA

• According to the latest IEA forecast in April, affected by the impact of the Iran war on the global economy; on the demand side, oil demand growth this year is expected to decrease by 80,000 barrels/day. This forecast is a significant downward revision from the 640,000 barrels/day increase in last month's report. And demand in 2Q26 is expected to decline by 1.5 million barrels/day. The demand reduction was initially concentrated in naphtha, LPG, and aviation kerosene in the Middle East and the Asia-Pacific region, but as supply shortages and prices continue to rise, the scope of impact will continue to expand.
• On the supply side, global oil supply plummeted by 10.1 million barrels/day to 97 million barrels/day in March, making it the most severe supply disruption in history; this was mainly due to continuous attacks on energy infrastructure in the Middle East and blocked oil tanker traffic in the Strait of Hormuz. Among them, OPEC+ production fell by 9.4 million barrels/day quarter-on-quarter, and non-OPEC+ production fell by 770,000 barrels/day month-on-quarter; the decline in Qatar's production offset the production growth in Brazil and the United States.
• On the refining side, global crude oil processing volumes continued to be under pressure due to raw material supply disruptions and damaged infrastructure, resulting in a tightening supply in the refined oil market. In April, refineries in the Middle East and Asia reduced operating volumes by about 6 million barrels/day. It is expected that the average global crude oil processing volume will fall by another 1 million barrels/day in 2026. Because middle distillate crack spreads soared to record highs, refining margins increased significantly. Overall, damaged supply chains are fully impacting global refined oil supply.
• In terms of inventories, to cope with shortages, observed global oil inventories fell by 85 million barrels in March, of which inventories in areas outside the Middle East Persian Gulf shrank sharply by 205 million barrels (-6.6 million barrels/day); mainly because blocked transportation caused the sudden drop in inventories outside the Gulf. At the same time, because the strait closure led to restricted exports, floating storage in the Middle East conversely increased by 100 million barrels, and onshore crude oil inventories also increased by 20 million barrels. China, meanwhile, took the opportunity to add 40 million barrels of crude oil to its depots. The overall inventory structure presents an unbalanced pattern of "backlog in the Middle East, emergencies in other regions."
• In terms of oil prices, affected by supply shocks, oil prices recorded their largest single-month increase in history in March. Spot crude oil prices soared to historic highs close to $150/barrel, and spot crude oil benchmark prices and spreads soared, with the increase exceeding the futures market. Price dislocation increasingly intensified, reflecting refiners rushing to buy supplies to replace Middle East crude oil, and the increase in refined oil prices even far exceeded that of crude oil.
• Restoring energy flow in the Strait of Hormuz remains the most critical factor in alleviating global energy and economic pressure. In early April, strait transportation was severely restricted, with loading volumes of crude oil and other products at only about 3.8 million barrels/day, which shrank sharply from more than 20 million barrels/day in February before the crisis. Alternative export routes (Saudi Arabia's west coast, the UAE's Fujairah port, and the Iraq-to-Turkey Ceyhan pipeline) have increased from less than 4 million barrels/day before the war to 7.2 million barrels/day, but it is still far from enough to fill the gap. Total oil export losses exceeded 13 million barrels/day. The cumulative supply loss in March exceeded 360 million barrels, and another 440 million barrels are expected to be lost in April. After the US announced the blockade of ships entering and leaving Iranian ports, the situation is still continuing to deteriorate.
• Whether the two-week ceasefire agreement can turn into lasting peace and whether the Strait of Hormuz can resume normal traffic remains unclear. The prospect of achieving lasting peace through negotiations is currently still unclear, and the situation is highly uncertain. The IEA predicts that Middle East oil and gas supplies will gradually recover by mid-year, but will not return to pre-conflict levels, and frankly admitted that considering the complexity of the situation, this forecast may be overly optimistic. Another scenario assumes that if the conflict continues and the risks of energy production and trade in the Middle East remain high, the global energy market and various economies need to be prepared for potential major shocks in the coming months.

OPEC

• According to the latest OPEC report in April, in terms of oil prices, the March OPEC Reference Basket (ORB) price rose by $48.46/barrel from the previous month to an average of $116.36/barrel. The Brent crude near-month contract rose by $30.23/barrel from the previous month to an average of $99.60/barrel; the WTI crude near-month contract rose by $26.48/barrel from the previous month to an average of $91/barrel. Among them, the spread between Brent and WTI near-month contracts widened by $3.75/barrel from the previous month, averaging $8.60/barrel. The forward curves of all major crude oil futures benchmarks steepened sharply, and the inter-period spreads between the most recent futures contracts fell into deeper backwardation. Against the backdrop of supply disruptions and rising oil prices, hedge funds and other money managers are increasingly bullish on oil and have significantly increased their net long positions.
• The global economic growth forecasts for 2026 and 2027 remain unchanged from last month's assessment, at 3.1% and 3.2%, respectively.
• On the demand side, global oil demand is estimated to grow by 1.4 million barrels/day in 2026, unchanged from last month's assessment. Among them, OECD countries are expected to grow by 100,000 barrels/day, while non-OECD countries are expected to grow by about 1.3 million barrels/day. In 2027, global oil demand is estimated to grow by about 1.3 million barrels/day, also unchanged from last month's assessment. Among them, OECD countries are expected to grow by 100,000 barrels/day, and non-OECD countries are expected to grow by about 1.2 million barrels/day.
• On the supply side, non-DoC liquid fuel production is estimated to grow by about 600,000 barrels/day year-on-year in 2026 and 2027, unchanged from last month's assessment. NGLs and unconventional liquid fuels in DoC countries are expected to grow by 100,000 barrels/day year-on-year in 2026, reaching an average of about 8.8 million barrels/day; the year-on-year increase in 2027 is about 100,000 barrels/day, reaching an average of 8.9 million barrels/day. According to available data, crude oil production in DoC countries in March fell sharply by 7.7 million barrels/day from the previous month, to an average of about 35.06 million barrels/day.
• On the refining side, affected by the sharp decline in refined oil production and the soaring crack spread of middle distillates in March, refining margins in major regions rose sharply. The intensive maintenance season for refineries, trade flow restrictions in the areas east of Suez, and refinery production cuts further pushed up refined oil margins. This led to the increase in refined oil prices exceeding the increase in raw material prices, thereby enhancing refining profitability.

US Crude Oil Data Update

Slight crude oil inventory build, continuous and significant drawdowns in SPR and refined products, noticeable drop in refinery utilization rate

Combining the two weeks of data released by the EIA on April 15 and April 22, as well as the Baker Hughes rig report for the same period. During these two weeks, US commercial crude oil inventories decreased by 910,000 barrels to 463.8 million barrels in the first week, but then in the second week, due to a surge in crude oil imports, with daily imports increasing by about 787,000 barrels and a brief weakness in refining demand; refineries reduced capacity utilization rates due to profit considerations and partial facility adjustments. Capacity utilization dropped significantly by 2.4% to 89.60% in the first week, and dropped by 0.5% to 89.1% in the second week compared to the previous week, and the crude oil processing volume of refineries subsequently decreased by 55,000 barrels/day. The slowdown in refining speed coupled with a large amount of crude oil arriving at ports led to an inverse increase in inventory of about 1.9 million barrels, pushing the total to 465.7 million barrels, which is about 3% higher than the five-year average level for the same period.

At the same time, to balance the surging international oil prices caused by Middle East geopolitical conflicts and blocked transportation in the Strait of Hormuz, the US government took continuous and strong intervention measures. Within two weeks, authorities cumulatively released about 8.3 million barrels of crude oil from the Strategic Petroleum Reserve (SPR), causing the total volume of strategic reserves to decline all the way to 405 million barrels. This shows that the government, in order to avoid high energy costs impacting the domestic economy and pushing up inflation, released the SPR to supplement liquidity for the commercial market and attempted to make up for the supply gap in the international market.

In stark contrast to the volatility of crude oil inventories, the refined oil market showed extremely strong consumption and export for two consecutive weeks. Gasoline inventories saw astonishing drops of up to 6.3 million barrels and 4.6 million barrels respectively during these two weeks, and distillate inventories including diesel and heating oil also simultaneously experienced continuous losses of 3.1 million barrels and 3.4 million barrels. This wave of sharp inventory drawdowns in refined oil was mainly due to strong demand in the US end-consumer market and the reorganization of the global supply chain triggered by geopolitical conflicts: the domestic summer driving peak season in the US is gradually approaching, domestic industrial and transportation demand remains steady, superimposed on the tense situation in the Middle East, European and Asian buyers are sharply turning to the US Gulf of Mexico to seek alternative sources of goods, resulting in an increase in the export volume of US aviation fuel and other petroleum products, thoroughly digesting the capacity of refineries. Although the capacity utilization rate of US refineries still maintains relatively active refining momentum, the supply side still cannot catch up with the speed at which refined oil is swallowed by the market.

In terms of upstream exploration activities, Baker Hughes data reflected the strict capital discipline and conservative operational logic of the US shale oil industry. The total number of active drilling rigs in the United States showed a slow downward trend over these two weeks, slightly dropping to 545 in the first week, and continuing to decrease to 543 in the following week; among them, oil drilling rigs dropped from 411 to 407. Although international oil prices at that time were in a highly attractive high-level range, US producers held a highly wait-and-see attitude towards extreme geopolitical uncertainty, rising oilfield service costs, and potential supply chain bottlenecks, and did not blindly expand capacity as in the past. This also explains why, under the dual background of high oil prices and massive releases of strategic reserves by the government, domestic drilling activities in the United States showed a phenomenon of decreasing rather than increasing.

Important News & Current Events

US-Iran Peace Talks Stall Again

The US-Iran peace talks have stalled again. Although the ceasefire has been broadly maintained since early April, the Strait of Hormuz is still blockaded by both sides. This supply shock has cut off the supply of crude oil, fuel, natural gas, and even fertilizer, triggering market concerns about an inflation crisis. Trump originally scheduled senior envoys Jared Kushner and Steve Witkoff to travel to Pakistan on Friday, April 24, to participate in the US-Iran peace talks mediated by Pakistan, but Trump canceled the trip on Saturday, April 25. Trump stated that Iran "offered a lot, but not enough," and believed that the United States holds all the leverage. If Iran wants to negotiate, it should proactively contact the US side. The Iranian president responded forcefully that Iran would not be forced to negotiate under "threats or blockades." This means that the two sides still have no consensus on the conditions of negotiation, and the peace process is temporarily stalled.

Currently, the negotiations are stuck on:

1. The US believes Iran's concessions are insufficient. Trump believes the conditions proposed by Iran are still insufficient for the US to accept, so he canceled the envoy's visit.
2. Iran is unwilling to negotiate under blockade and military pressure. Iran believes that if the United States still maintains blockades, military threats, and energy export restrictions, the negotiations will not have an equal foundation.
3. The two sides have no consensus on the scope of negotiations. Iranian Foreign Minister Araghchi is prepared to propose armistice conditions, including a new legal framework for the Strait of Hormuz, lifting the blockade, compensation for losses, and guarantees not to take military action again. However, Iran does not intend to discuss the nuclear issue, which may differ from the core armistice conditions most expected by the United States.

In the Strait of Hormuz, the US intercepted sanctioned vessels by blockading Iranian energy exports. The US Central Command stated that since the blockade began, 37 ships have been forced to change course. Iran, on the other hand, used a "mosquito fleet" made up of gunboats to blockade the strait, further exacerbating the shipping crisis. This also caused crude oil prices to continue to close above $100 per barrel on Friday.

Although Trump announced on April 23 that Israel and Lebanon would extend their ceasefire deadline for three weeks to facilitate a permanent peace agreement, Israeli Prime Minister Netanyahu still ordered strikes on Hezbollah targets within Lebanon on Saturday. The Israeli military also demanded that residents of seven villages in southern Lebanon evacuate, and later launched attacks on multiple areas. Hezbollah said it would continue to respond to the attacks. This indicates that even if the main US-Iran battlefield is temporarily under a ceasefire, regional conflicts in the Middle East still run the risk of spilling over.

The US-Iran peace talks have stalled again, indicating that although the situation in the Middle East has not further escalated into an all-out conflict, the possibility of peace talks still lacks a substantive breakthrough. Trump's cancellation of the envoy's trip to Pakistan reflects the US view that Iran's concessions are insufficient, while Iran's refusal to negotiate under blockades and military pressure indicates that significant differences still exist between the two sides regarding negotiation conditions and scopes. In particular, Iran hopes to focus on lifting the blockade, the legal framework for the Strait of Hormuz, compensation, and security guarantees, and is unwilling to discuss the nuclear issue. This may make it difficult for the US to accept, so the probability of reaching a complete peace agreement in the short term is relatively low. Additionally, regional conflicts still run the risk of spillover, which means the situation in the Middle East has not truly cooled down, and any new conflict may once again continue to push up oil prices. However, Trump still emphasized that if Iran wants to talk, it should call, and Iranian Foreign Minister Araghchi still returned to Pakistan after the US representatives canceled their trip. Trump expects to hold a meeting with his senior national security and foreign policy team on Monday to discuss the negotiation deadlock. This shows that although the probability of short-term success is not high, negotiations may be expected to resume within 1-2 weeks.

Sustained High Oil Price Environment Remains a Positive Catalyst for Energy Companies such as XOM and CVX

Against the overall macroeconomic backdrop of 2026, influenced by major factors such as the intensification of Middle East geopolitical conflicts, the stalled US-Iran negotiations, and the threat of a substantive blockade of the Strait of Hormuz, the global oil supply chain presents extreme tightness and anxiety, which in turn pushes international oil prices up and maintains them at historically high levels. Under the market expectation of high oil prices, the two major US multinational energy giants releasing their 1Q26 financial reports on May 1: ExxonMobil (XOM) and Chevron (CVX), although eroded in their initial book numbers by hedging operations and logistics time differences, if deeply analyzed from their operational structure, industry fundamentals, and market supply and demand logic, the sustained high oil price environment remains a substantive positive catalyst with long-term fundamental support for such large integrated energy companies.

According to statistics, XOM expects first-quarter revenue to be approximately $79.494 billion and EPS to be $1.53, but unrealized losses on futures hedging contracts and the deferred effect of oil tankers failing to deliver in time will cause a massive negative impact of up to $5.3 billion; similarly, CVX expects revenue of about $52.305 billion and EPS of $2.03, and its downstream business also faces an after-tax net profit impairment of $2.7-$3.7 billion due to hedging operations and accounting adjustments. These high losses mainly stem from the fact that multinational energy companies, in order to lock in long-term profits and guard against the risk of unannounced oil price collapses, routinely establish short hedging positions in the futures market. When international oil prices surge irrationally due to sudden geopolitical conflicts, these hedging contracts, which originally served as insurance mechanisms, will generate huge Mark-to-Market paper losses. However, these derivative financial product losses and oil tanker logistics delays caused by the sharp rise in oil prices are essentially short-term and one-off accounting interferences and have not caused any destruction to the companies' core oil production capabilities and tangible assets. Once the old contracts expire one after another and new positions are built at higher prices reflecting the current market, these negative impacts on the books will gradually converge and even reverse in future quarters.

The massive real cash flow brought by the high oil price environment to these energy giants supports their long-term bullishness. In the most core upstream exploration and production (E&P) business, high oil prices demonstrate extremely powerful profit leverage effects. XOM expects the rise in oil prices to increase its upstream business net profit by about $1.4 billion, and CVX expects to reap $1.6-$2.2 billion in excess net profit from it. Because the current crude oil market faces a physical supply bottleneck caused by geopolitics, plus US shale oil producers universally adhere to strict capital discipline and have not expanded drilling capacity due to short-term high oil prices, under the structure of "restricted global supply, restrained domestic capacity, and resilient market demand," coupled with the low possibility of a short-term peace agreement between the US and Iran, the indefinite opening of the Strait of Hormuz, and the uncertain recovery schedule of energy and export infrastructure after the war ends, the high-level volatility of oil prices will be maintained for a longer period of time. During this long-cycle dividend stage, XOM and CVX, relying on their strong and complete vertical integration advantages, can not only transform the expensively extracted upstream crude oil into substantial and lucrative profits, but their massive downstream facilities such as refining and chemicals can also maintain stable high-value product output when the market panics to snatch oil and crack spreads widen, forming an excellent natural hedge.

Based on the above analysis, although in the early stages of severe oil price spikes, the overall financial performance of energy giants may seem eroded due to the brief backlash of hedging mechanisms, it is still difficult to conceal the fact that their core profitability is expanding significantly with oil prices. After absorbing short-term hedging shocks, these multinational oil companies, relying on massive cash injections from their upstream businesses, will have more ample free cash flow to strengthen their balance sheets. In the long run, this will give them tremendous confidence to execute large-scale stock buyback plans and pay high dividends, and further consolidate their pricing power and risk-resistance capabilities in the global energy market.

Conclusion

Based on the oil price trends and various data over the two weeks, the core contradiction in the current international energy market lies in the geopolitical showdown centered on the right of passage through the Strait of Hormuz. Deep differences between the US and Iran over negotiation conditions, the order of lifting the blockade, and the nuclear issue have repeatedly exposed the fragility of the ceasefire agreement, and the peace process is still unlikely to see a decisive breakthrough in the short term. At the same time, the structural damage to the global energy supply chain has far exceeded the market's initial expectations; phenomena revealed by IEA data such as the loss of more than 13 million barrels of exports daily, large-scale cuts in refinery operating volumes, and the continuous use of strategic reserves all indicate that this crisis has had a massive physical impact on the international energy market. Under this pattern, short-term oil price fluctuations will continue to be dominated by the progress and setbacks of diplomatic negotiations. Any news of a ceasefire extension, the opening of corridors, or a new round of summits is enough to trigger violent intraday fluctuations in oil prices. However, even if the Strait of Hormuz is declared open after a peace agreement is reached, analysts generally point out that the normalization of the supply chain will take at least several months, and the risk premium of oil prices will remain high for a considerable period of time. For energy giants like XOM and CVX, short-term hedging losses and book impacts will eventually converge as contracts expire, and the upstream profit brought by long-cycle high oil prices is the more decisive fundamental driving force. Looking ahead, whether US-Iran negotiations can get back on track within the next one to two weeks, and whether the actual traffic volume in the Strait of Hormuz can see a quantifiable rebound, will be the most critical observation indicators for the medium-term trend of oil prices.