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I. International oil prices and supply and demand dynamics
1. Oil prices continue to decline
Suppressed by the imbalance between supply and demand and the strengthening of the US dollar, WTI crude oil futures closed down 1.2% to $62.50/barrel on May 19, and Brent crude oil fell 1.1% to $65.80/barrel. U.S. commercial crude oil inventories accumulated to 443 million barrels (year-on-year +3.4%), coupled with OPEC+'s production increase plan, the market's concerns about oversupply have intensified.
2. OPEC+ internal conflicts intensified
The OPEC+ meeting failed to reach a consensus on the adjustment of production in July. Saudi Arabia advocated maintaining the current production increase strategy to punish member countries that violated the rules, while countries such as the UAE demanded a reassessment of price targets. The public differences led to a decline in market confidence in the stability of the supply side.
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II. Policy and geopolitics
1. U.S. sanctions against Russia escalate
The United States announced a second round of sanctions on Russia's oil transportation network, adding 87 tankers and 12 trading companies to the sanctions list. Russia's seaborne exports are expected to drop to 2.8 million barrels per day (30% less than before the sanctions). China, Japan and South Korea are accelerating their shift to Middle East crude oil imports.
2. U.S.-China tariff game eases
The China-U.S. temporary tariff reduction agreement has entered the implementation stage. China's import tax rate on U.S. crude oil has been temporarily reduced from 34% to 25%, and the United States has simultaneously reduced tariffs on some petrochemical products. Policy easing promotes short-term market sentiment recovery.
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III. Corporate dynamics and industrial chain
1. Sinopec layouts hydrogen energy network
Sinopec announced the start of construction of 10 commercial hydrogen refueling stations in the Yangtze River Delta region, planning to form an average daily green hydrogen supply capacity of 200 tons in 2026, and promote the transformation of refining business to the low-carbon field.
2. Marathon Crude Oil's debt risk rises
Marathon Crude Oil (MPC) was downgraded to BBB- by S&P due to a 73.6% year-on-year decline in net profit in the first quarter. The company plans to cut capital expenditures and sell non-core assets to cope with cash flow pressure.
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IV. Domestic market and price adjustment
- The "four consecutive declines" of refined oil have landed
At 24:00 on May 19, domestic refined oil prices were lowered for the fourth time this year, with gasoline and diesel falling by 230 yuan and 225 yuan per ton respectively. The national retail price of No. 92 gasoline fell to the range of 7.0-7.3 yuan/liter, and the price difference in Xinjiang, Hainan and other places further widened.
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V. Long-term challenges in the industry
- Clean energy substitution is accelerating
The European Union announced the "Hydrogen Infrastructure Act", planning to build a European-North African hydrogen pipeline by 2030, and the cost of green hydrogen is expected to drop to US$1.8/kg. The International Energy Agency (IEA) warned that the growth rate of oil demand in 2025 may be 5 percentage points lower than the increase in supply.