1. International oil prices plummeted to a four-year low
1. WTI fell below the psychological barrier of $60
During the trading session on May 5, the price of WTI crude oil futures fell to $58.95 per barrel, the lowest level since April 2021; the price of Brent crude oil futures hit a low of $61.77 per barrel. The market's concerns about the imbalance between supply and demand and the strengthening of the US dollar have intensified, coupled with the impact of the US tariff policy, resulting in a cumulative decline of more than 15% in oil prices for three consecutive trading days.
2. Double pressure of the US dollar and inventory
US commercial crude oil inventories continue to accumulate, and the Fed's hawkish policy expectations have pushed the US dollar to strengthen, forming a compound negative of "inventory pressure + currency depreciation", which has suppressed the momentum of oil price rebound.
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II. Supply-demand contradiction and OPEC+ production increase pressure
1. OPEC+ production increase exacerbates oversupply
OPEC+ has increased its daily production by 410,000 barrels since April. Saudi Arabia, Russia and other countries have increased production beyond expectations, resulting in a potential daily oversupply of 950,000 barrels in 2025. The International Energy Agency (IEA) predicts that demand growth will only be 1.03 million barrels per day, far lower than the 1.6 million barrels per day supply increase of non-OPEC countries.
2. Market confidence crisis in production cut agreement
Saudi Arabia and the UAE’s differences on price targets and market share have become public, and the market has doubts about OPEC+’s ability to implement production cuts, further exacerbating oil price fluctuations.
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III. Geopolitical and policy shocks
1. U.S. sanctions on Russia have escalated
The United States announced a new round of sanctions on Russia’s oil transportation network, involving more than 180 tankers and core enterprises, resulting in a drop of about 25% in Russia’s seaborne oil exports. Asian consumer countries such as China, Japan and South Korea have accelerated the adjustment of their energy import structure.
2. China-US tariff game
China imposes 34% tariff on US crude oil and liquefied natural gas, and six Chinese industry chambers of commerce jointly declare opposition to US policies. The escalation of trade frictions drags down global economic expectations and suppresses the outlook for crude oil demand.
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IV. Market reaction and institutional forecasts
1. Refining and chemical companies are under pressure on profits
Domestic refined oil wholesale prices continue to fall, and Shandong local refinery gasoline has fallen by 200-300 yuan/ton. The refined oil price adjustment window may open on April 17. The short-term rebound in the centralized procurement price in Northeast China reflects the easing of regional supply and demand contradictions.
2. Goldman Sachs lowers its oil price expectations
Goldman Sachs predicts that Brent crude oil and WTI crude oil prices will fall to US$62/barrel and US$58/barrel in December 2025, respectively, and further drop to the US$55-60 range in 2026, and the long-term demand outlook is bearish.
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V. Impact of clean energy technology
- Acceleration of hydrogen energy commercialization
China and the European Union announced plans to build hydrogen energy pipelines. It is expected that the cost of green hydrogen will drop below US$2/kg by 2030, which will weaken the share of oil in the transportation energy sector in the long term.