Summary of Key Points
International oil prices have recently seen a rise followed by a decline: Since July, Brent crude has increased by 26%, and WTI by 42%, but both fell in the first week of August (by 9%-10%). On August 13th, prices dropped again due to lowered demand expectations and a significant increase in US inventories. The main factor supporting high oil prices is the geopolitical risk associated with the Strait of Hormuz (which hinders shipping), but surging inventories and declining demand are putting pressure on prices. Institutions generally believe that oil prices will remain volatile in the short term. Domestic refined fuel prices may be adjusted lower this weekend, allowing car owners to save approximately 11 yuan per full tank of gas.
1. The Strait of Hormuz: The "Curse" Keeping Oil Prices High, and also a Trigger for Volatility
The Strait of Hormuz is a critical route for global oil transportation, with about one-third of the world's maritime oil passing through it. Currently, tensions between the US and Iran over maritime rights and nuclear issues have led to disruptions in shipping: The volume of oil transported via the nearby Strait of Mandeb has dropped from 8.9 million barrels per day to 7.2 million barrels per day. Although Trump claims that US forces "fully control" the strait, the lack of progress in negotiations means the risk has not completely disappeared. This directly contributes to high oil prices; any issue with shipping through the strait causes concerns about supply shortages and thus maintains high prices. However, once there are signs of negotiation progress, prices can plummet (as seen in previous fluctuations).
2. Surging Inventories + Cooling Demand: Why Did Oil Prices Suddenly Slow Down?
There were two direct reasons for the price drop on August 13th:
- Unexpected Increase in Inventories: The latest US data shows that crude oil inventories increased by 17.4 million barrels in one week, the largest increase since January 2023, far exceeding market expectations of a decrease of 1.4 million barrels. This surplus of supply leads to lower prices.
- Collective Reduction in Demand Expectations: OPEC has lowered its demand growth forecast for 2026 from 780,000 barrels per day to 580,000 barrels per day (for the fourth consecutive time); the IEA also predicts a 1.6 million-barrel decrease in demand (a 510,000-barrel reduction from last month). With fewer expected oil consumers, prices are likely to be affected.
3. What Do Institutions Think?
Institutions generally agree that oil prices will remain volatile in the short term but are unlikely to experience dramatic fluctuations:
- New Lake Futures suggests that current global crude oil inventories are much lower than they were in February, and refined fuel inventories are also low, so prices are not expected to fall significantly. If tensions between the US and Iran escalate, prices may rise.
- Goldman Sachs is more specific, indicating that short-term price risks are "two-way" (both upward and downward), but slightly favoring an increase. It predicts that Brent crude prices will likely be around $80 per barrel by the end of 2026, with support between $70-$75; any further decline would be limited.
- Nanhua Futures adds that the significant differences in views between the US and Iran and the long negotiation process mean geopolitical risks will not disappear quickly, making it unlikely for prices to fall significantly.
4. What About Us Car Owners?
The domestic refined fuel price adjustment window opens at midnight on August 14th (Saturday). Price changes are expected to be around 0.15 yuan per liter:
- For a 70-liter tank of gas, filling it up could save about 11 yuan (the cost of a cup of milk tea).
- Why the price drop? During the price adjustment period (from July 31st to August 14th), international crude oil prices were generally on a downward trend. Although there were short-term increases due to Middle East tensions, the overall trend was downward, so the reduction in prices is still significant.
- Tip: It's more cost-effective to refuel after midnight on Saturday.
5. Short-Term Oil Price Trends: A Battle Between Bullish and Bearish Views
The market currently has both bullish and bearish factors:
- Bullish views: The Strait of Hormuz issue remains unresolved, and inventories are low.
- Bearish views: Demand expectations have decreased, and US inventories have increased significantly.
Therefore, oil prices are not expected to rise or fall continuously but will fluctuate within a high range. If tensions in the strait escalate, prices may rise; if negotiations progress or inventories increase further, prices may fall. Ordinary car owners need not worry about sharp price increases but should not expect significant drops, as prices are likely to remain between $80-$90 per barrel.
In summary, short-term oil price movements are mainly determined by geopolitical and supply/demand factors. For us, it's sufficient to pay attention to the refined fuel price adjustment schedule; refueling this weekend could save you some money!
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