Everbright Futures: U.S. and Iran Announce Temporary Ceasefire, Crude Oil Opens Down Over 10%

From a fundamental perspective, the short-term sharp decline in prices is more influenced by sentiment, and even if the war ends, the new demand for strategic reserves, rising insurance and freight costs related to the Strait of Hormuz, and broader geopolitical risk premiums in the market may still support oil prices. Meanwhile, the potential legislation on “toll fees” for the Strait of Hormuz could have far-reaching impacts on global trade, essentially turning geopolitical conflicts into long-term economic harvesting tools, making it difficult for short-term oil prices to fully unwind the “war premium.” Data-wise, as of April 3rd, API crude oil inventories increased by 3.72M barrels, gasoline inventories decreased by 3.97M barrels per day, and distillate inventories decreased by 599k barrels per day. The reduction in refined product inventories indicates a continued improvement in fundamentals. In the short term, attention should be paid to Trump’s attitude toward the Middle East and the navigation situation in the Strait of Hormuz, as oil price volatility may increase. Traders should be cautious of trading pace and risks. (Everbright Futures)