On January 15th, international crude oil futures ended their five-day uptrend and suffered a significant drop, mainly due to the rapid disappearance of the risk premium accumulated due to the Iran situation. The settlement price of the WTI crude oil contract in March was $59.08 per barrel, a daily decrease of $2.80, or 4.5%; Brent crude oil: The March contract settlement price was $63.76 per barrel, a daily decrease of $2.76, or 4.1%.

It is worth noting that Brent crude oil hit $66.82 per barrel during intraday trading, setting a temporary high since September. However, due to multiple negative factors, the price quickly fell back, with significant intraday fluctuations.

The easing of geopolitical situation and rapid resolution of risk premium

Geopolitical factors are the core driving force behind the reversal of oil prices this time. Market concerns about supply disruptions in Iran have shifted from heating up to easing, and the previously accumulated safe haven buying has been concentrated and withdrawn.

The US attitude sends a signal of easing: On January 15th local time, White House Press Secretary Levitt stated that Trump and his team are closely monitoring the situation in Iran while retaining all options. Phil Flynn, Senior Analyst at Price Futures Group, pointed out that market expectations have shifted from "highly likely to hit Iran" to "less likely", and this expectation difference directly constitutes the main pressure for the downward trend in oil prices on the day.

Sanctions as a substitute for armed action: On the same day, the US Treasury Department announced sanctions against 18 individuals, entities involved in the export of oil and petrochemical products from Iran, as well as foreign companies associated with Iran. Iranian official Larijani was also included in the sanctions list. The market interprets this move as a signal that the United States is replacing armed strikes with economic sanctions, and the risk of escalating geopolitical conflicts is decreasing.

The situation in Venezuela adds to the negative: Although the United States has seized an oil tanker related to Venezuela, Trump's call with Venezuelan Acting President Rodriguez sends a positive signal, and the market expects that short-term stability will drive Venezuela to increase oil exports in the coming weeks, further suppressing oil prices.

Inventory data falls short of expectations, highlighting fundamental pressures

The inventory data released by the US Energy Information Administration (EIA) has further intensified the downward pressure on oil prices, confirming the current weak situation on the demand side of crude oil. Data shows that last week, there was an unexpected increase in US crude oil inventories, and the growth rate of gasoline inventories far exceeded market expectations, reflecting the weak recovery of refined oil consumption and the renewed concern about supply-demand imbalance.

Outlook for the future: The dual pull between supply and demand and geography

The crude oil analyst of SunSirs believes that in the short term, oil prices will be in a long short game pattern, and the amplitude may further expand. The hidden concerns on the demand side in the medium and long term will still dominate the trend.

Positive factors: There are structural benefits on the supply side

Risk of supply contraction in Iran: The continued escalation of US sanctions on Iran, coupled with the impact of sanctions on Iran's oil export related industrial chain, may lead to further decline in Iran's crude oil supply in the future, forming supply side support.

Slow recovery of Venezuela's exports: Despite market expectations for its export growth, the country's oil industry infrastructure is weak, and the export recovery process is slow, making it difficult to have a substantial impact on the global supply pattern in the short term.

Negative factors: significant pressure on the demand side in the medium to long term

The weak US economy is dragging down demand: The poor performance of US economic data directly affects the demand for crude oil and refined oil consumption, limiting the room for oil price rebound.

The accelerated erosion of market share by new energy substitution: The promotion of new energy in some Asian countries and regions is accelerating, and the proportion of traditional energy in the energy consumption structure continues to be eroded. Crude oil demand is facing medium - to long-term structural contraction pressure.

Overall, short-term oil prices will maintain a volatile trend in the game of supply and demand and geopolitical fluctuations: any fluctuations in geopolitical situations (such as the escalation of the Middle East conflict or sudden changes in the situation in Iran) may trigger a short-term surge in oil prices; However, the weak demand side, high inventory fundamentals, and the long-term trend of new energy substitution will continue to suppress oil prices, making it difficult to support the trend of rising oil prices, and the overall amplitude may further increase.

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