Guest introduction: Xu Anjing, energy and chemicals analyst at Dadi Futures Co., Ltd., holds a master's degree from Tongji University and is primarily responsible for research on the chemicals sector. He has accumulated extensive practical experience at industrial enterprises and private equity funds, providing crude oil pricing, hedging for energy and chemical products, and information consulting services to refineries, petrochemical trading companies, and other industrial enterprises over the long term. Through high-quality services, he has helped enterprises effectively reduce procurement costs, lock in supply chain profits, and improve profitability, earning a solid reputation. He has been engaged in energy and chemicals research for many years, with deep expertise across the oil upstream and downstream supply chain, and has developed a futures research framework that combines macro research, fundamental analysis, and market capital sentiment with resonance across long, medium, and short cycles.

Crude Oil: The Geopolitical Logic Behind a Three-Stage Price Trajectory

Reviewing the crude oil market from early September to the present, the overall trajectory can be divided into three stages. The first stage was the rally from early to mid-September. During this period, geopolitical tensions suddenly intensified, with military conflicts and the closure of key pipelines occurring in combination, driving market panic over crude oil supply shortages to a peak. The Brent front-month contract approached $110, and WTI also broke through $105. The second stage was the pullback from mid to late September. As relevant parties signaled willingness to negotiate, oil prices began to retreat from their highs. The third stage is the consolidation pattern from late September to now. After in-depth negotiations, differences remain enormous, and the situation has now entered a stalemate, with oil prices moving into sideways trading.

Looking at the recovery of energy and chemical product exports from the Gulf region, a clear divergence is evident. Crude oil and condensate have recovered fastest, reaching about 90% of pre-war levels; refined products and liquefied petroleum gas have recovered to about 60%; liquefied natural gas has recovered only 20%; and naphtha is at approximately two-thirds. Iran's recovery is far behind that of Saudi Arabia, the UAE, and other countries. Its crude oil exports have plummeted from nearly one million barrels per day in July to the current 50,000 to 100,000 barrels per day, and methanol exports have also dropped from 160,000 tons in August to 80,000 tons in September.

Refined Product Reserve Release: Limited Impact, Thinner Safety Cushion

The recently discussed new round of oil product reserve releases is actually part of a previously planned program. Looking at individual countries, European nations have not been proactive in their release progress. Germany still has 15 million barrels of quota untouched, France's strategic reserves remain full, Spain has released only one-third, and the UK has 14 million barrels essentially unmoved. From the market reaction, oil prices fell only slightly after this news was announced, then quickly rebounded due to new geopolitical events. The impact on oil prices is relatively limited because what the market is more focused on is this: after the reserve release, the forward safety cushion has become thinner.

Chemicals: The Tug-of-War Between Supply Recovery and Negative Demand Feedback

On the supply side, from July to now, chemical plant operations have indeed seen substantial recovery. Domestic operating rates for pure benzene, PX, PTA, and other products have increased significantly, and ethylene glycol oil-based units have also improved notably. Coal-heavy products such as ethylene glycol, PP, and LLDPE have also begun to raise operating rates as coal chemical maintenance concludes. Overall, chemical supply is recovering.

On the inventory side, most chemical product inventories are at extremely low levels not seen in the past five months. Although operating rates have risen substantially, there has been no obvious inventory buildup. Warehouse receipt registrations are also near historical lows, and the near-month tightness has not fundamentally changed.

On the demand side, peak season performance has been disappointing. The main reason is that inventories close to the end-user stage remain at neutral levels, downstream enterprises still have low-priced raw materials available, and their acceptance of high-priced feedstock is limited. As high raw material prices become prolonged and their own low-priced inventories are depleted, acceptance of higher prices is expected to gradually improve.

Regarding specific products, asphalt operating rates remain persistently low due to supply constraints involving Venezuelan Merey crude. PVC logic has low correlation with other energy and chemical products and has a relatively independent trajectory.

Geopolitical Stalemate and Cost Support

The core disagreement in current U.S.-Iran negotiations centers on the sequencing of actions: one side demands unfreezing first before opening strait passage, with the nuclear issue deferred; the other side requires seeing the strait actually opened first before discussing the nuclear issue and asset unfreezing. On the surface, it is a dispute over sequencing, but at a deeper level, it reflects a lack of trust foundation. The previously signed memorandum of understanding has collapsed, and both sides have experienced being let down after making concessions, leaving a weak mutual trust foundation. Currently, negotiation channels are increasingly narrowing, and before the midterm elections, both sides may remain locked in a stalemate that is difficult to break.

This means that although crude oil supply has improved month-over-month, it has not been reflected in inventory and spread changes. Crude oil spreads remain at high levels, tanker freight rates are elevated, and for chemical products, costs remain persistently high. At the same time, the issue of ensuring refined product supply will squeeze feedstock supply for chemical products.

Product Strength Assessment and Strategy Approach

Overall, the crude oil supply inflection point has been seen, but the fundamental inflection point has not yet appeared, let alone a price inflection point, so the overall bias remains bullish. Most chemical products follow crude oil's trajectory with varying degrees of strength, and for calendar spreads, the approach is mainly buying the near month and selling the far month on dips.

In terms of strength ranking: methanol tops the list. Its logic is the most unique—Iranian methanol exports account for a large share of China's imports, while domestic coal-based methanol capacity that can be started has already been started, leaving limited room for further increases. There are few maintenance plants in the fourth quarter, and combined with Iran needing to prioritize natural gas for civilian use in winter, supply-side constraints are pronounced. Each year, about 13% to 14% of China's methanol consumption comes from imports, of which 60% to 70% comes from Iran, and this gap is difficult to fill in the short term.

Oil products come next. With geopolitical tensions unresolved, the elasticity of oil products consistently exceeds that of chemical products. This is because chemical products still face the problem of negative demand feedback, and only after downstream low-priced raw materials are exhausted and acceptance of higher-priced feedstock improves will the elasticity of chemical products gradually be released.

Ethylene glycol ranks third. Its logic is similar to methanol—maintenance that needed to be done has largely been done, leaving relatively limited room for further increases. After that come aromatics, olefins, and then other products with low correlation to crude oil, such as urea and caustic soda.

Summary

The core contradiction in the current commodities market lies in the tug-of-war between cost support under geopolitical stalemate and negative demand feedback. Crude oil supply has improved month-over-month but fundamentals remain tight; chemical supply is recovering but demand absorption is limited. Under such a landscape, methanol, due to Iranian supply constraints, has become the strongest product in the energy and chemicals sector with the clearest logic, and oil products have greater elasticity than chemical products. Going forward, close attention must be paid to the evolution of the geopolitical situation and the pace of end-user inventory depletion.