Reasons for the recent three-year low in international oil prices

The reasons for the recent drop in international oil prices to a three - year low can be summarized as follows:

I. Intensified supply - demand imbalance

• OPEC+ production increase policy: OPEC and its allies (OPEC+) unexpectedly announced a production increase plan, breaking the long - standing strategy that supported high oil prices. Although Brent crude oil prices have approached $70 per barrel, OPEC+ still plans to increase production next month, directly leading to an oversupply in the market.
• Increased supply from non - OPEC countries: After the expansion of oil fields in Kazakhstan, its exports have increased. The production of shale oil in the United States has continued to grow. Coupled with the commissioning of other new supply projects, the situation of oversupply has been further aggravated.
• Weak demand in Asia: China's crude oil imports in the first two months decreased by about 5% year - on - year. Moreover, the premium of Middle Eastern crude oil has collapsed (for example, the spread of Murban crude oil against the Dubai benchmark has narrowed), reflecting weak buying demand in the Asian market.

II. Geopolitical and policy factors

• Cooling of geopolitical risks: There are signs of easing in the Russia - Ukraine conflict (Russia has hinted at its willingness to discuss a cease - fire agreement), and the situation in the Middle East is temporarily stable. The market's concerns about supply disruptions have eased.
• US policy intervention: The Trump administration has pressured OPEC to increase production. At the same time, it plans to cut the crude oil exports of Iran and Venezuela (by more than 90% and 200,000 barrels per day respectively). However, the policy effects are lagging, and the market focuses more on the increase in supply in the short term.

III. Impact of the economy and financial markets

• Slowdown in global economic growth: The economic recovery in Europe and the United States is lackluster, and the growth rate of demand in China has declined. Coupled with the expectation of the Fed's interest rate hikes, the US dollar has strengthened, which has suppressed the demand for crude oil priced in US dollars.
• Intensified speculative selling: Hedge funds have significantly reduced their long positions in WTI and Brent crude oil to multi - year lows, and the market sentiment is strongly bearish. Institutions such as Goldman Sachs and Morgan Stanley have successively lowered their oil price forecasts, and some even predict that Brent crude oil may fall to the $50 range.

IV. Structural factors

• Pressure from energy transition: The rise of renewable energy and the popularization of electric vehicles have weakened the long - term oil demand expectation, and the market's concern about the decreasing dependence on fossil fuels has intensified.
• Pressure from high inventory levels: Global commercial crude oil inventories (especially in the United States and China) are at a high level, and the demand for replenishing strategic petroleum reserves has not been launched on a large scale.

Summary: The current decline in oil prices is the result of the resonance of supply - demand contradictions, policy interventions, economic weakness, and market sentiment. Although geopolitical conflict risks (such as the situation in the Palestine - Israel region) and the replenishment of the US strategic reserves may limit the decline, the oversupply pattern is difficult to change in the short term, and oil prices still face downward pressure.