International oil prices plunge to a three-year low! Read an article to understand what is happening in the oil market.

Last week, the international benchmark Brent crude oil futures price suddenly broke out of months of silence, hitting a three-year low. And now, many oil traders are wrestling with the question: what is happening in the international oil market? Will this round of steep decline continue to deepen? Undoubtedly, various bearish factors have converged, creating one of the worst oil market sentiments in recent history: OPEC and its allies unexpectedly announced plans to increase production next month when oil prices were close to $70/barrel, changing their long-term strategy of supporting high prices. US President Trump continues to threaten the largest trading partners with a "capricious" trade war, which could weaken oil market demand. Given that Russia has hinted for the first time at being willing to discuss a temporary ceasefire agreement with the US on the Russia-Ukraine conflict, geopolitical risks are also decreasing overall. Finally, the decline in Asian demand is also leading to a moderation of the premiums of Middle East crude oil, indicating an unstable long-term outlook for oil demand. These factors have combined to briefly push the benchmark Brent crude oil futures out of the major trading range of $70 to $85 since September last year. Since approaching $80 in mid-January, US WTI crude oil has fallen by 16%. Some speculators are also actively betting on a bearish trend in oil prices and are not ready to end easily. Data from the US Commodity Futures Trading Commission (CFTC) shows that in the week ending March 4, hedge funds reduced their total long positions in US WTI crude oil by 2,266 contracts to 172,576 contracts, near a low since 2010. According to data from the European ICE Futures Exchange, unilateral long bets on Brent crude oil futures have also decreased by 41,583 contracts, marking the largest single-week decline since July last year. "Trump's position on the energy market is clear: he is pressuring OPEC to increase production while also engaging in backdoor negotiations to ease the Russia-Ukraine conflict," wrote Cayler Capital, a commodity trading advisory firm focused on the oil market. "What will be the result? The oil industry is showing bearish tendencies, with prices gradually falling amid ongoing uncertainty." In addition to the policies of Trump and OPEC, another danger signal for the oil market comes from Middle Eastern oil prices - following US sanctions on Russian and Iranian oil, this region was once the most resilient area in the global oil market. However, with the fading of the rush to buy alternative oil to sanctioned oil, the premiums of these oils relative to the Dubai benchmark have collapsed - the premium of Middle Eastern Murban crude, a main oil favored by Asian buyers, to Dubai crude has significantly narrowed. Note: Murban crude, Oman crude, and Dubai crude are the three major benchmarks for oil prices in the Middle East. Data shows that China's crude oil imports in the first two months of this year have decreased by about 5% year-on-year. Meanwhile, with production growth, the prices of light crude oil this year have remained weak. Kazakhstan will increase oil exports this month after expanding one of its largest oil fields. More supply outside the OPEC+ alliance will also begin production later this year, with the International Energy Agency predicting an oversupply before the recent action of OPEC+. All this has made Wall Street more pessimistic. Morgan Stanley currently forecasts an average Brent crude oil price for this year of $70/barrel, down $5 from its previous forecast; Goldman Sachs also sees a risk of oil prices falling below its expected range of $70-85; JP Morgan last week became the first institution to predict that oil prices could fall to the $50 range at the London Energy Conference; and Citigroup reiterated its bearish forecast of $60... Is there still hope for the oil market? So, is there really no hope for a turnaround in the current oil market? Not necessarily. Many industry insiders believe that there are still some reasons that may suggest that the further downside potential for oil prices may be limited, such as: The Trump administration continues to threaten Iran with a policy of extreme pressure, with US Treasury Secretary Beeson recently stating that the goal is to cut the country's oil exports by more than 90%. The US has signaled plans to cancel Chevron's license to extract and sell oil in Venezuela, a move that could reduce daily supply by 200,000 barrels. The US is also preparing to force more companies to exit the Venezuelan market. With the Trump administration being tougher on Middle East issues than the Biden administration, the threat of a renewed Israel-Palestine conflict remains. The US Energy Secretary is seeking $20 billion in funding to supplement strategic oil reserves, a move that could effectively boost oil demand. Moreover, a more critical question is: at what level will oil prices impact oil production? Traders and analysts say that last week, trading of US oil contracts for delivery next year fell to just over $60 - a level not seen since 2023 and could threaten production growth. OPEC+ also reiterated that its actions can be "suspended or reversed depending on market conditions." So far, the impact of Trump's economic policies has caused US stocks to fall by about 6% from their historical highs less than three weeks ago. When consumer confidence in the US hit its biggest drop since 2021 at the end of last month, Brent futures followed suit, becoming one of the clearest signals of the impact of tariff policies on broader financial markets and affecting the oil market. Many traders and analysts believe that the next move in oil is no longer solely dependent on supply policies - macroeconomic data from the US and China could also become key factors in determining the next phase of commodity trends. "Tariffs suppress growth, and people are now worried about US economic growth," said Aldo Spanjer, senior commodities strategist at BNP Paribas in France. "This is a confirmation signal for all bears. And no bulls will build positions lightly at this moment." This article is reprinted from Cailian Press. GMTEight Editor: Chen Xiaoyi.