CITIC Futures: Continued Oil Supply Shortages, Geopolitical Dominance Driving Volatility

The geopolitical situation in the Middle East remains tense, with low shipping volumes and continued pressure on Persian Gulf countries to cut production. The basis and month spread in overseas markets are performing strongly. Starting in April, stockpiling reductions by consumer countries in the Asia-Pacific region will become evident, and oil prices are expected to fluctuate with a slight upward bias. Recently, freight rates for oil shipping have significantly retreated from March’s high points. The diversification of deliverable crude types for SC crude oil has led to a temporary weakening of the price difference between domestic and international markets to relatively low levels. The downward margin of the spread is relatively limited, and the correlation with external crude oil prices is expected to strengthen in the future. The main deviations in market expectations still stem from developments in the US-Iran conflict, the passage of oil tankers through the Strait of Hormuz, and attacks on energy facilities. (CITIC Futures)