Recently, the domestic potash fertilizer market has entered a stalemate, and the domestic chemical fertilizer summer market has entered the late stage of production, and most of the raw materials have been reserved in the early stage. The purchasing demand for new raw materials is not strong. Potassium fertilizer supply is relatively sufficient, but demand stamina is insufficient. In the case of relative imbalance between supply and demand, the market is deadlocked based on the bid price of major traders.

From the point of view of price, the price fell all the way at the beginning of the year, with a high speed and a large margin, until the low-end fell about 150-200 yuan/ton. However, from mid-to-late March, the price of most varieties hit the bottom. Before the Qingming Festival, most traders received more new orders and the order volume was on the high side. Therefore, they began to bid up, slightly. Although the increase was only 30 yuan/ton, the low-end price in the earlier period was cancelled one after another. 。 The long-awaited large contract this year has never been heard of. Even though the large contract volume has been basically completed last year, there is still a certain consensus between the international and domestic sides under the situation that the options continue to flow into the country. At present, the situation is not suitable for the negotiation of large contract. International traders have no negotiating advantage. Therefore, it is expected that the negotiation of large contract in the new year will be in the next stage. Half a year started, but the scope of negotiations is not well predicted.

According to the supply and demand situation of domestic potassium fertilizer market, the supply of potassium chloride market is relatively sufficient. Although the port stock has declined, there are 2.54 million tons in the total port as of last week, which is 7.17% higher than the same period last year, and the imported potassium supply is larger. There is no obvious trend of increase in domestic production. Since Qinghai factories resumed production in March, their output has been relatively normal, and the railway transportation is smooth, mostly to all regions one after another.

Overall, the potassium chloride market is in a state of oversupply, but most of the imported potassium is still concentrated in the hands of large traders, with limited stocks of intermediaries. Therefore, when the market prices of large traders are firm, it is expected that the price of potassium chloride will remain stable in the near future and will not fluctuate too much.

Recently, the international oil price has risen continuously to a new high in the second half of the year. Affected by this, this Friday (April 26) the domestic oil product price is expected to rise for the seventh time in the year, and the price increase of gasoline and diesel is expected to exceed 100 yuan per ton.

Since this year, sustained production cuts in non-OPEC oil-producing countries such as OPEC and Russia have resulted in tight supply in the oil market. Data show that OPEC crude oil production fell to about 30 million barrels per day in March, down more than 2.3 million barrels per day from last October’s high.

The escalation of U.S. sanctions against Iran has further heightened market concerns about future supply shortages. On April 23, international oil prices continued their upward momentum. As of the close, the price of light crude oil futures for June delivery on the New York Mercantile Exchange rose by $0.75 to $66.3 per barrel, or 1.14 per cent. London Brent crude oil futures for June delivery rose $0.47, or 0.63%, to close at $74.51 a barrel.

Affected by this, the reference rate of crude oil price change for domestic refined oil retail price adjustment is moving forward and the range is gradually expanding. According to Jin Lianchuang’s calculation, as of the seventh working day of April 23, the average price of reference crude oil varieties was 69.65 US dollars per barrel, with a change rate of 3%. The corresponding gasoline and diesel oil should be increased by 125 yuan per ton. The price adjustment window for this round is 24:00 on April 26. “Influenced by the Iranian issue, international oil prices or maintain a high level of operation, this round of product oil retail price increase is no longer suspense.” Said Zou Xuelian, an oil analyst at Jinlianchuang.

According to the data released by Xinhua Oil Price System, the average price change rate of crude oil package on April 23 is 3.58%, and it is expected to expand further in the next two working days. When the price adjustment window of refined oil opens at 24pm on April 26th, the price of domestic refined oil will rise again. It is estimated that the price of gasoline and diesel oil will rise by 190 yuan per ton, or 0.15 yuan per litre of 92# gasoline, or 0.16 yuan per litre of diesel oil.

Up to now, in 2019, the retail price limit of domestic refined oil has experienced seven price adjustment windows, which is “six rises and one strand”. In addition, due to the adjustment of VAT rate, since 24:00 on March 31, 2019, the highest retail prices of domestic gasoline and diesel have been reduced by 225 yuan and 200 yuan per ton respectively. After offsetting the rise and fall, the prices of domestic gasoline and diesel have been increased by 680 yuan and 675 yuan per ton since this year.

In the wholesale market, the activity is low, the main business units began to reduce prices for sales pressure, and the domestic automobile and diesel market fell again. However, the recent tightening of U.S. policy toward Iran has led to a sharp rise in international oil prices, strong news and a rebound in domestic automobile and diesel prices. As of April 23, the average price of 0# diesel oil in China was 6588 yuan/ton, up 236 yuan/ton from the beginning of the month; the average price of 92# gasoline was 7114 yuan/ton, up 12 yuan/ton from the beginning of the month. Zero price difference of 0# diesel oil batch in China was 1142 yuan/ton, 86 yuan/ton lower than that at the beginning of the month, while that of 92# gasoline batch was 2128 yuan/ton, 153 yuan/ton higher than that at the beginning of the month.

Zou Xuelian believes that on the whole, both the news and supply and demand have been boosted, and there is still room for the domestic automobile and diesel market to go up. Therefore, it is expected that the zero price difference of domestic gasoline and diesel batches will remain down before the price adjustment on Friday. Later, with the implementation of the increase in retail prices and the “May 1″ reserve, the demand for gasoline is difficult to increase significantly. It is expected that the range of gasoline follow-up is limited, and the price difference between wholesale and zero or after the fall tends to be stable and volatile. Diesel oil has a strong fundamentals, and the batch-to-zero price gap may be further narrowed.

Similarly, urea in mixed-trace nitrogen fertilizer circle is closely related to ammonium chloride. The market trend may converge and the price will influence each other. It can be replaced to some extent in the raw materials of compound fertilizer and mixed fertilizer. Of course, it is well known that this need not be discussed. Therefore, the trend of urea is particularly important for ammonium chloride enterprises. Recently, the urea market has been rising and falling again. At present, urea factory quotations, transaction prices and grass-roots wholesale prices have fallen, and large, small and medium-sized farmers and merchants have indicated that there is a market situation everywhere. Most of them are short-sighted about the future trend of urea. At this time, if the ammonium chloride enterprises are thinking, they are worried that the falling price of urea will “affect” the ammonium chloride, and whether the ammonium chloride will suffer a double blow under 80% of the start of construction.

At present, the domestic ammonium chloride market is generally good. Spot is tight, most enterprises can issue orders until the end of the month or mid-May, most enterprises still need to control the status of receiving orders or have not received orders for nearly a month; there is also a tentative small increase in the high price part, and the arrival speed in the circulation market is slow, such as the arrival price of dry ammonium along the Yangtze River is about 730-750 yuan/ton, the arrival price of dry ammonium in central China is about 850-900 yuan/ton, and Huazhong is about 850-900 yuan/ton. The price of dry ammonium in the eastern part is about 780-830 yuan/ton, the price of car plates in Yunnan and Guangxi is about 760-800 yuan/ton, while in the Northeast market, unlike other areas, the demand is at the end, the replenishment is limited, the supply of dry ammonium in the Bayuquan Port is sufficient, and the selling price is reduced to about 840-850 yuan/ton. Is ammonium chloride self-insured when urea market weakens and ammonium chloride starts to rebound?

On the one hand, 80% of the joint alkali enterprises started construction, and the short-term trend continues to rise. At present, the maintenance of an ammonium chloride enterprise in Anhui is scheduled to resume production on the 22nd. The load of an ammonium bichloride enterprise in Jiangsu is on the low side and will resume next week. Now a few large ammonium chloride plants in Sichuan and Jiangsu are still under overload production. In addition, the soda ash market is good, and the factory continues to push up its price, so the enterprise will maintain a high start-up, and the output of ammonium chloride will increase accordingly. However, some ammonium chloride enterprises in Guangxi, Hunan, Dalian and Gansu still stop for a long period of time, among which the plant of one ammonium chloride plant in Dalian will be delayed to the second half of the year, and the rest of the enterprises that have stopped for a long time may not resume production; and a short-term overhaul of a plant in Jiangsu at the end of April, and a large ammonium chloride plant in Jiangsu and Chongqing in early and late May are scheduled to carry out a half-month overhaul, when the supply of ammonium The volume will decrease.

On the other hand, the entanglement of the alternating stage of spring and summer demand. At the end of the Spring Festival in Northeast China, the demand for ammonium chloride will be reduced obviously, not to mention that only a small amount of ammonium chloride will be replenished in the later period. In terms of the sufficient supply of ammonium chloride from the market and ports, the high-price ammonium chloride in Northeast China will continue to fall under pressure, and the stop of some compound fertilizer plants or extruded granular ammonium chloride plants will obviously reduce the demand for ammonium chloride. At the end, the production enterprises have completed the execution of the orders to be issued. In the alternate gap stage between spring and summer, the terminal will produce resistance to the high-price raw material fertilizer, and the purchasing volume will gradually decrease. However, the expected value of high nitrogen fertilizer is high in the summer of May. At present, the start-up of compound fertilizer enterprises is slowly rising to about 55.14%. Considering the cost, some compound fertilizer and BB fertilizer enterprises will choose ammonium chloride and extruded granules as raw materials.

Finally, the negative impact of urea on ammonium chloride is limited. At present, the urea market is weak and the price falls slightly. From the starting point of urea enterprises’gradual recovery, some manufacturers say that their prices still have a downward trend in May, but the liquid ammonia market is rising steadily, with more ex-factory prices of about 3000-3500 yuan/ton. If the urea prices continue to fall, the production focus of the factory will be tilted. To liquid ammonia, alleviate the pressure of urea shipment and save the price of urea. In addition to India’s possible tender in early May, prophase hype is indispensable, which means that the price of urea should fall to a limited extent, and there is still a certain price difference with ammonium chloride. As a raw material, low-cost ammonium chloride has relative advantages.

Generally speaking, the rebound of falling urea and ammonium chloride is bad for the future trend of ammonium chloride; however, the overall ammonium chloride market is still dominated by favorable conditions, such as sufficient waiting for issuance, enterprise control orders, successive start-up of fertilizer in summer, etc. It is expected that the ammonium chloride market will continue to maintain a good trend in the short term, with high prices and stable operation as the main, cautious and correct, but not “grass and trees are all”. Soldiers.

Core reading

“China is changing very fast, and we need to be part of it. We are very optimistic whether it is to develop domestic business in China or to cooperate with China’s energy companies to develop international business.

Statistics show that by the end of 2018, the number of foreign-invested enterprises in China has reached 960,000, and the actual utilization of foreign capital has exceeded 2 trillion US dollars. Although the number of foreign-invested enterprises is less than 3% of the total number of Chinese enterprises, they have contributed 10% of China’s employment, 20% of tax revenue and 50% of China’s exports.

“Foreign investment plays a decisive role in achieving high-quality economic growth and opening to the outside world at a high level.” Recently, Pang Guanglian, secretary-general of Sinopec Federation International Capacity Cooperation Enterprise Alliance, summarized and pointed out at the “Petrochemical Industry Development Conference”.

With the further liberalization of China’s policy of encouraging foreign investment, the highly noticed Foreign Investment Law was passed during the two sessions this year and will be implemented on January 1, 2020. Recently, a number of insiders told reporters in an interview that, as a basic law in the field of foreign investment, the implementation of the Foreign Investment Law means that China will usher in the most relaxed era of foreign investment, and the petrochemical industry is no exception.

Continuous Improvement of Foreign Business Environment

In recent two years, our government has promulgated a number of policies intensively. Through constantly improving the legal system of foreign investment, we can provide institutional guarantee for expanding opening up and actively utilizing foreign investment.

In June 2018, the Special Management Measures for Foreign Investment Access (Negative List) (2018 Edition), issued by the National Development and Reform Commission and the Ministry of Commerce, significantly reduced the restrictions on foreign investment, thus eliminating the policy barriers to foreign-funded chain gas stations. In December of the same year, the negative list of market access (2018 edition) was issued to realize the “non-prohibited and immediate access” of investment in areas other than the list. All market participants can enter the list equally according to law.

In March of this year, the new Catalogue of Industries Encouraging Foreign Investment solicited opinions from the public. According to reports, in the new edition of the catalogue, more than 400 items in 13 categories, including manufacturing, chemical fibers, rubber and plastics, are listed as the national catalogue of industries encouraging foreign investment, including 21 items involving chemical raw materials and chemical products manufacturing. “These areas may attract foreign investors’willingness to invest in China. Once the new catalogue is released and implemented, it will mean that China will open the door for foreign enterprises to enter China’s chemical manufacturing industry in a large scale.” Pang Guanglian said.

In the view of Zhao Weiliang, chairman of Daudal (China) Investment Co., Ltd., the Foreign Investment Law is another important example of the more standardized and fair competitive environment for foreign-funded enterprises and the formation of a new pattern of comprehensive opening-up in the past 40 years since China’s reform and opening-up.

According to Pang Guanglian, China’s ranking in the global business environment convenience ranking has continued to rise in the past three years, ranking 46th in the world in 2018. Among them, the company ranks 28th in terms of starting enterprises and 6th in terms of executing contracts. 

Increasing Foreign Investment

At present, China is the world’s largest chemical market, accounting for about 40% of the market share, and plays a leading role in the growth of the global chemical market. It is estimated that by 2030, China will account for nearly 50% of the global gross domestic product. It is self-evident that the huge potential of market growth is attractive to the whole world.

“Sinopec has entered a stage of high-quality development, but it still faces a series of outstanding problems such as safety, energy saving and environmental protection. Domestic and foreign enterprises have considerable cooperation prospects in the fields of technical cooperation and market development at home and abroad, which can truly achieve complementary advantages and sustainable development.” Liu Maoshu, vice president and general manager of Honeywell UOP China, said in an interview with reporters.

Especially in the past two years, the continuous optimization of foreign business environment has accelerated the investment decision-making of petrochemical foreign investment. Especially in the field of high-end petroleum and petrochemical industry, Shell, Basf, ExxonMobil, Saudi Foundation Industry Corporation, Saudi Arabia Amy Oil Company and many other well-known multinational oil companies have expanded their investment territory in China, and announced that major petrochemical projects involving joint ventures or sole proprietorships have blossomed in many places in China, with an estimated total investment of more than 37 billion US dollars.

According to the Development Report of Foreign Investment Enterprises in China’s Petroleum and Chemical Industry (2018 Edition), by the end of 2017, there were more than 7200 production-oriented foreign investment enterprises in China’s petrochemical industry from 95 countries and regions around the world. Although only 4.6% of the total number of production enterprises in the petrochemical industry, in 2017, the main business income exceeded 2.6 trillion yuan, accounting for nearly one fifth of the main business income of the whole industry. Meanwhile, the average registered capital of foreign-funded enterprises is much higher than the average registered capital level of domestic production enterprises in the petrochemical industry, more than five times.

According to the above-mentioned report, by the end of 2017, foreign-invested enterprises in China’s petrochemical industry had made use of more than 280 billion US dollars in various types of investment, an increase of more than 15% over the previous year.

Foreign capital will play a leading role in industry demonstration

In the interview, Liu Maoshu believed that China’s increasingly open foreign business environment would help foreign-funded energy enterprises to further play the role of industry demonstration and pioneer, introduce new investment and operation modes, product standards and advanced intelligent manufacturing concepts, inject new vitality into the development of China’s petrochemical industry, and at the same time, promote the domestic petrochemical industry to shape a new market pattern and operation. Logic, and then form the competition pattern of the whole industry chain.

“As a product supplier of the whole oil and gas industry chain and one of the first international energy companies to enter China, Daudal has been actively involved in the whole industry chain business of China’s energy industry for the past 40 years. Looking forward to the future, we believe that in such a more open environment, Doddle will have more opportunities. We are confident in China’s economic development and more committed to the Chinese market. Zhao Weiliang said.

As a leading global supplier of specialty materials and chemical technology, industrial control technology and Internet of Things solutions, Honeywell has been expanding its business in China since 1935. At present, its four major business groups have settled in China, and its Asia-Pacific headquarters is located in Shanghai. Liu Maoshu also told reporters: “In the future, we will continue to deepen the innovation and development of environmental protection technology, promote extensive cooperation with Chinese enterprises, and provide tailor-made advanced environmental protection technology, products and solutions.”

The elimination of policy barriers and the recent optimization of foreign investment environment for China’s foreign-funded chain gas stations have directly led to many investment decisions such as BP’s layout of thousands of gas stations in China.

Recently, in an interview with reporters, Dedley, the global CEO of BP Group, pointed out: “In the past, BP has been developing its business in China in a cooperative way. China’s Foreign Investment Law and the new round of reform in China’s oil and gas industry enable us to independently develop the retail territory in China. The first practical result is to directly help us implement the investment strategy of increasing 1000 retail gas stations in China, and expand the charging business of gas stations. BP has accumulated very good experience in this respect.

“China is changing very fast, and we need to be part of it. We are very optimistic whether it is to develop domestic business in China or to cooperate with China’s energy companies to develop international business. Dadley said.

Influenced by the news that the United States is ready to terminate the sanctions exemption for Iranian oil imports, the price of crude oil at home and abroad has risen sharply. Analysts believe that supply constraints combined with geo-conflict will accelerate the pace of oil price rise, the global heavy oil supply gap is difficult to solve in the short term, and oil prices are expected to remain strong.

News Surface Stimulation Strengthen

Influenced by the news, crude oil futures at home and abroad rose sharply this week. WTI crude oil futures rose by 2.62% to $65.75 a barrel in the United States, reaching the highest level of $66 a barrel since November last year; Brent crude oil futures rose by 3% to $74.13 a barrel, up to $74.31 a barrel; domestic crude oil futures rose by 3.31% to $490.2 a barrel.

Reportedly, the U.S. government is ready to announce an end to the exemption from sanctions on Iranian oil imports. All Iranian oil importers must stop importing in a short time, or they will be subject to U.S. sanctions. The United States resumed sanctions on Iranian oil exports in November last year, while granting eight Iranian crude oil importers temporary exemptions for six months.

Analysts pointed out that with the end of the sanctions exemption period, Iranian crude oil will face zero export dilemma in the future, which will greatly increase the tension of the current global crude oil supply system, but also lead to geopolitical risk. Because Iran controls this important oil pipeline in the Holmes Strait.

According to statistics, the Strait of Hormuz is responsible for nearly 40% of global oil exports, and more than 90% of the total oil exports in the Persian Gulf pass through the Strait of Hormuz. At the same time, about 17 million barrels of crude oil tankers pass through the Strait every day, accounting for about 30% of the world’s crude oil shipments by sea. In the context of further deterioration of US-Iran relations, supply tensions and overlapping geopolitical conflicts will accelerate the pace of oil price rise.

The supply pattern is difficult to understand

API data show that as of April 12, U.S. crude oil stocks fell by 3.1 million barrels to 452.7 million barrels; Cushing crude oil stocks by 1.6 million barrels; and gasoline stocks by 3.6 million barrels.

Analysts believe that the data suggest that the pace of global crude oil demand may slow down, and that if OPEC producers achieve production reduction targets, the crude oil market may achieve a balance in the second quarter.

Analyst Ann believes that the global heavy oil supply gap is difficult to solve in the short term. Globally, Saudi Arabia has the potential to substantially increase production in a short period of time, so whether Saudi Arabia’s output policy will adjust to the demands of the United States next will be crucial. The current situation is very similar to that in May last year, but after last year’s “roller coaster” oil prices, even if Saudi Arabia may ease production cuts due to the escalation of sanctions imposed by the United States in the future, in order to avoid repeating the same mistakes, its policy adjustment is likely to lag behind.

It believes that the market will pay more attention to Saudi Arabia’s output policy. After a sharp fall in oil prices in the fourth quarter of last year, Saudi Arabia will be more cautious in adjusting its production policy, which means that Saudi Arabia is less likely to release its supply substantially to the market in the short term. Against the background of a sharp decline in the scale of global refinery overhaul, the global crude oil supply gap is expanding. Therefore, in the future, oil prices will maintain the overall upward trend, Brent crude oil is expected to hit the top level of $85 per barrel.

The US will end Iranian crude oil import exemption and increase geopolitical risks

U.S. Secretary of State Pompeo will announce that he will no longer exempt any country from the current Iranian crude oil import ban, which will take effect on May 2. The suspension of shipments by Indian refineries in May indicates that India, one of the main buyers of Iranian crude oil, has also begun to take the initiative to circumvent Iranian crude oil. In view of the fact that the United States listed the Iranian Revolutionary Guard as a terrorist organization and Iran threatened to restart the uranium enrichment centrifuge, the previous escalation of sanctions by the United States would be a shock blow to Iran and further intensify the contradiction between the two countries. Iran may take some extreme Countermeasures in the future, not excluding the possibility of a hot war.

Short-term Solution of Global Heavy Oil Supply Gap

Globally, Saudi Arabia has the potential to substantially increase production in a short period of time, so whether Saudi Arabia’s output policy will adjust to the demands of the United States next will be crucial. The current situation is very similar to that in May last year, but after the roller coaster of oil prices last year, even if Saudi Arabia is likely to ease production cuts due to the escalation of sanctions imposed by the United States in the future, its policy adjustment will probably lag behind in order to avoid repeating the same mistakes.

Investment suggestion

We believe that the shock sanctions imposed by the United States on Iran will intensify the contradiction between the two countries, and that the geopolitical risk in the Middle East will rise further in the future. Next, the market will pay more attention to the trend of Saudi Arabia’s production policy. We believe that after the sharp fall in oil prices in the last four quarters, Saudi Arabia will be more cautious in adjusting its production policy, which means that Saudi Arabia is less likely to release its supply substantially to the market in the short term. In the context of the sharp decline in the scale of global refinery overhaul, the global crude oil supply gap is expanding. We believe that the overall trend of oil prices will be maintained in the future, and Brent is expected to hit the top $85 per barrel.

Risk warning

OPEC will release production substantially in the short term, or global demand will shrink sharply.

1. The United States will end Iranian crude oil import exemption and increase geopolitical risks

According to the Washington Post, U.S. Secretary of State Pompeo will announce that he will no longer exempt any country from the current Iranian crude oil import ban, which will take effect on May 2. Boosted by news, international oil prices rose rapidly, with Brent breaking through $73 a barrel.

This year, against the backdrop of OPEC production cuts, Venezuela’s sanctioned output declines, and Libya’s chaotic situation escalating, the global supply of heavy oil has been tight, and it is obvious that the recovery of exemptions by the United States at this time further exacerbates the upward risk of oil prices. Iran’s crude oil exports have fallen to less than 1 million barrels a day since April. India and China remain relatively stable imports of Iranian crude oil. But just last week, India’s four major refineries announced a moratorium on Iranian shipments in May and turned to Mexico, the United States and OPEC, indicating that India, one of Iran’s main crude oil buyers, has also begun to circumvent Iran. Oil, which also means that even if Iran may maintain certain exports through some abnormal means in the future, it will be difficult to reverse the trend of a sharp decline in future crude oil exports. At present, Iran has not made any comment on the U.S. ruling, but in view of the previous U.S. listing the Iranian Revolutionary Guard as a terrorist organization and Iran’s threat to restart uranium enrichment centrifuges, the escalation of U.S. sanctions will shock Iran and further intensify the contradiction between the two countries, Iran may take extreme Countermeasures in the future, not excluding the emergence of such measures. The possibility of a hot war.

2. Global Heavy Oil Supply Short-term Difficulty

In a Washington Post report, Mepperpeo plans to announce increases in production promises from Saudi Arabia and other oil-producing countries, such as the United Arab Emirates, to make up for the shortfall in Iranian crude oil in order to mitigate the risk of a sharp rise in oil prices. Globally, Saudi Arabia has the potential to substantially increase production in a short period of time, so whether Saudi Arabia’s output policy will adjust to the demands of the United States next will be crucial. The current situation is very similar to that in May last year, when the United States announced its withdrawal from the Iranian nuclear agreement, Saudi Arabia eased production cuts at the OPEC mid-year meeting in June, releasing large quantities of supplies to the market, causing oil prices to collapse in the fourth quarter. We think that after last year’s roller coaster oil prices, Saudi Arabia will be very cautious in adjusting its production policy. After all, after the oil price crash, Saudi Arabia has to reduce its production excessively to reverse the decline of oil prices. Even if Saudi Arabia is likely to ease production cuts in the future due to the escalation of sanctions imposed by the United States, its policy adjustment is likely to lag behind in order to avoid repeating the same mistakes.

In addition, the scale of global refinery overhaul in the second quarter will drop dramatically compared with that in the first quarter. After centralized overhaul in the first quarter, the global cracking price gap has been significantly repaired, which will lay the foundation for improving the start-up rate of refineries in the second quarter. According to Energy Aspects statistics, the scale of global refinery overhaul after May will decrease by 2.5 million barrels/day compared with that in the first quarter, and the increase of the start-up rate of refineries will drive the original one. With the recovery of oil processing capacity and the continued decline of supply in Iran and Venezuela, the global crude oil supply and demand gap will also intensify.

3. Investment proposals

We believe that the shock sanctions imposed by the United States on Iran will intensify the contradiction between the two countries, and that the geopolitical risk in the Middle East will rise further in the future, which does not exclude the possibility of a hot war. Globally, Saudi Arabia is the main supplier of Iran’s crude oil shortfall in a short time, but we believe that after the sharp fall in oil prices in the fourth quarter of last year, Saudi Arabia will be more cautious in adjusting its production policy, which means that Saudi Arabia is less likely to release its supply substantially to the market in the short term. In the context of the dramatic decline in the scale of global refinery overhaul, global crude oil The supply gap is widening. Therefore, we believe that oil prices will continue to go up as a whole in the future. Brent is expected to hit the top of $85 per barrel.

4. Risk cues

OPEC will release production substantially in the short term, or global demand will shrink sharply.

Geographical risk is heating up again

U.S. oil distribution soared nearly 3% to a new year high

U.S. WTI June crude oil futures electronic disk closed Monday (April 22) up $1.61, or 2.51%, to $65.68 a barrel. Oil prices jumped nearly 3% on Monday to a six-month high as concerns about global supply constraints intensified after the United States announced further pressure on Iranian oil exports.

Meanwhile, ICE Brent crude oil futures closed up $2.16, or 3.0%, at $74.13 a barrel in June.

Increased U.S. sanctions on Iran are worrying about crude oil supply

The United States said it would lift its exemption from May 2 for eight economies to buy Iranian oil without sanctions from the United States.

Oil prices hit a new high in 2019 for the first time after the Washington Post reported on the Trump Administration’s new policies.

Michael Bradley, strategist at Tudor Pickering Holt, an investment bank, points out that this unexpected move is driving up oil prices. He said in a research report that crude oil investors were surprised today because the Trump administration said it would not extend the exemption clause allowing any country to buy Iranian oil without facing U.S. sanctions. Many expect the United States to take stronger action on exemptions, but most did not expect to announce zero exemptions.

Last November, after President Trump unilaterally withdrew from Iran’s nuclear agreement with world powers in 2015, the United States imposed sanctions again on Iranian oil exports. However, the U.S. government granted Iran’s eight largest oil buyers immunity, allowing them to make limited purchases within six months.

The eight buyers are China and India, Iran’s largest customers, and Japan, South Korea, Turkey, Italy, Greece and Taiwan, China. The exemption allowed Iran to continue exporting about 1 million barrels of oil a day, down from about 2.5 million barrels a day last year.

Does OPEC continue to reduce production will affect oil prices?

After months of saudi-dominated production cuts, supply in the oil market is declining rapidly. OPEC and other oil producers, including Russia, are taking the lead in reducing production by 1.2 million barrels a day.

John Kilduff, founding partner of Again Capital, an energy hedge fund, said Monday that geopolitical risk premiums have largely returned to the oil market. If not all, most legitimate businesses will avoid buying Iranian oil. Iran’s oil supply will be reduced to a trickle.

After crude oil prices plunged in the last few months of 2018, Brent’s crude oil price rose 38% this year, and U.S. crude oil prices rose nearly 45%.

The White House said in a statement that the United States will work with OPEC member Saudi Arabia and the United Arab Emirates to take timely action to ensure that global demand is met as Iranian oil withdraws from the market.

Saudi energy minister Falh said Saudi Arabia would coordinate with other oil producers to ensure that consumers had adequate supplies and that the global oil market was not imbalanced.

In the coming weeks, Saudi Arabia will consult closely with other oil-producing countries and major oil-consuming countries to ensure a balanced and stable oil market, which is conducive to both oil-producing and consumer countries and to the stability of the world economy.

OPEC and its allies are scheduled to meet at the end of June to decide whether to raise the production ceiling or continue to curb production.

Daryl Liew, head of portfolio management at Reyl Singapore, a financial services company, said India could be hit hardest by U.S. policy among Iranian oil buyers. Daryl believes that India may be one of the major potential countries to be affected by rising oil prices in terms of its current account deficit. This will also essentially put pressure on inflationary pressures.

The unrest in Libya will continue to affect oil prices

Meanwhile, Tripoli, the capital of Libya, OPEC’s main oil producer, suffered a series of air strikes and explosions last weekend, escalating violence that could further threaten oil supplies. Libya is in the midst of a full-scale civil war.

Wu Kang, head of Asia analysis at Prussian Energy, said the situation in Libya could lead to a rapid decline in oil production. Libya produces 1.1 million barrels of oil a day. If problems arise, 300,000 to 400,000 barrels of oil a day may be immediately affected.

Wu adds that much depends on how Saudi Arabia will cope with this situation – they have excess capacity – but supply concerns will put pressure on oil prices in the short term.

According to data released by the National Bureau of Statistics on April 17, gross domestic product in the first quarter of 2019 was 21.3433 trillion yuan, an increase of 6.4% over the same period last year. Customs data show that from January to March this year, China imported 12168 million tons of crude oil, an increase of 8.2% over the same period last year, and 24.27 million tons of natural gas, an increase of 17.8% over the same period last year.

The Ministry of Commerce announced that in 2019, the allowable import volume of non-state-owned crude oil trade exceeded 200 million tons, reaching 202 million tons. Roughly estimated, in 2019, the import volume of non-state-owned crude oil trade may exceed 40% of the total import volume of crude oil. Two years ago, the proportion was still below 20%. This releases an important signal that China’s crude oil imports will continue to grow in the first half of 2019. Starting from April, with the start of spring ploughing in China, the demand for refined oil will gradually drive the demand for crude oil.

Internationally, the first quarter of international oil prices showed a volatile upward trend. International oil prices rose significantly in early January, reversing the market downturn at the end of last year. In the middle of the year, as the number of oil drilling wells in the United States hit its biggest decline in nearly three years, Sino-US trade negotiations reappeared and international oil prices rebounded again. In the latter part of the year, OPEC actively implemented the reduction of production and the decline in the number of oil drilling wells in the United States, which stabilized the fluctuation of international oil prices. In February and March, international oil prices continued to rise, Sino-US trade negotiations progressed smoothly, and OPEC cut production significantly.

According to OPEC’s monthly report, its output fell to 32.22 million barrels per day in March, due to production cuts and the Venezuelan crisis. The sharp decline in production has led to tightening of the oil market. OPEC lowered its average demand for crude oil to 30.3 million barrels per day in 2019 and increased global oil demand to 1.21 million barrels per day in 2019.

In addition, OPEC sources said that if oil production in Iran and Venezuela fell further and oil prices rose to $80-85 a barrel by June, oil producers could increase production.

At present, among the three major benchmark oils, the monthly difference of WTI has fallen, but Brent’s monthly difference is still strong. The EIA forecasts Brent crude oil prices to be $65.15 per barrel in 2019 (previously expected to be $62.78 per barrel), while expectations for $62 per barrel in 2020 remain unchanged.

Influenced by continued supply constraints, international crude oil futures prices rose again. Brent crude oil closed on April 19 at $72.01 a barrel, up 0.39%. The index has risen 32.98% since this year. NYMEX light crude oil rose continuously to $64.05 per barrel, up 39.84% in the year. Some analysts believe that at present, production cuts and geopolitics will continue to support international oil prices, but may gradually fall after summer.

Guangzhou Daily News (full media reporter Zhang Zhongan) “Stock market, commodities and other prices are rising. The rise in the stock market was mainly due to relatively loose monetary policy expectations. The rise in international oil prices is due to the decline in inventories, extreme supply and geopolitical factors. A Sunshine Private Equity Officer in Shenzhen said.

International oil prices have risen by more than 30% since this year

Reporters found that the recent international oil prices continue to rise, this year has been a cumulative increase of more than 30%, some varieties have increased by about 40%, and institutions are still in warehousing orders.

In the international market, the price of light crude oil futures delivered on the New York Mercantile Exchange in May rose by $0.24 to $64.51 per barrel, or 0.38 Per cent. NYMEX Light Crude continued to contract at $64.05, up 0.30%. Since this year, the index has risen by 39.84%. Meanwhile, London Brent crude oil futures for June delivery rose $0.39, or 0.54%, to close at $72.01 a barrel on the latest trading day. Brent crude oil also reported $72.01 in a row, a cumulative increase of 32.98% this year. In addition, the WTI crude oil futures index rose by 40.27% in the same period. In the domestic market, the cumulative increase of crude oil since 1906 has also reached 23.64%.

Private equity analysts have pointed out that crude oil, as a special commodity, has continued to rise since this year, mainly due to concerns about tight supply, including declining inventories and geopolitics leading to a reduction in oil supply in some oil-producing areas. According to media reports, data released last week by the Joint Organisation Data Initiative (JODI) showed that Saudi Arabia, the world’s largest oil exporter, lost 277,000 barrels of crude oil a day in February from a year earlier to 697,000 barrels. Wang Qiang, an analyst at Merchants Securities, said Saudi Arabia, Venezuela, Iraq and Iran were among the countries with the biggest output cuts in March, with Saudi Arabia’s daily output falling by 324,000 barrels per day annually, down more than 1.3 million barrels per day from the 11 million barrels per day record set in November last year. From the implementation rate of production reduction, the overall implementation rate in March has reached about 155%, and the overall performance is still expected by supermarkets.

In the week ending April 12, U.S. crude oil inventories fell by 1.396 million barrels, while the market is expected to increase by 2.3 million barrels, according to data released last week by the U.S. EIA.

OPEC’s latest monthly report in April showed that its crude oil production fell by 534,000 barrels per day to 3,022,000 barrels per day in March, the lowest since February 2015. Goldman Sachs raised its Brent crude oil price forecast for the second quarter of this year to $72.50 from $65 a barrel. The reason is that the macroeconomic risk-taking environment and changes in supply may push the spot price of crude oil higher. Huang Wentao of CITIC Construction Investment Securities also believes that OPEC production cuts and geopolitical risks increase, making the market optimistic about the development pattern of the crude oil market. At present, the supply of crude oil market is still tightening under the support of production restriction, and the strong situation of crude oil is expected to continue in the short term. He suggested that we should pay close attention to the monthly reports of the three major organizations in the later period.

However, Wang Qiang, an analyst with China Merchants Securities, believes that, in light of the overall supply and demand situation, there is little chance that the production reduction alliance will collapse in the first half of the year. Geopolitics has led to tight supply, and the release of shale production will still depend on the third quarter. Therefore, crude oil supply remained tight in the first half of the year. But the core of sustainability of current production cuts lies in the positive feedback of oil prices and production cuts. The implementation of the action has reached a very high level in March, and there is still some potential to continue to reduce production in some areas in the future, but the space for the reduction alliance to exceed expectations again is too small. “In the next 1 to 2 months, it is expected that the probability of diminishing marginal effects will be unavoidable.” Wang Qiang said. Goldman Sachs analysts also expect oil prices to gradually fall from this summer as shale oil and OPEC crude oil production increases.

According to Bloomberg News, the Organization of Petroleum Exporting Countries (OPEC) has succeeded in boosting oil prices through production cuts, but now OPEC is risking another victory by letting crude oil prices soar too high.

In the first quarter of this year, OPEC and its allies joined forces to cut production, pushing oil prices back to more than $70 a barrel, the biggest increase in nearly a decade.

Saudi Arabia, OPEC’s strongest member, has made it clear that Saudi Arabia is determined to maintain tight supply in the global oil market. Saudi Arabia’s move is likely to repeat the scene of 2018, when production cuts pushed oil prices to a four-year high, triggering strong opposition from President Trump and a hasty reversal by Saudi Arabia.

“It seems that OPEC is over tightening the market,” said Ed Morse, head of commodities research at Citigroup in New York.

Earlier this year, OPEC and its partners launched a new round of production cuts, when the rapid growth of U.S. shale oil production and the fragile growth of global demand seemed to lead to global oil oversupply. But because of OPEC’s production restrictions, coupled with further geopolitical squeezes on oil supply, the risk of global oil shortages has become greater.

The Times of India reported Wednesday that Saudi Arabia Amy, the world’s largest crude oil producer, was “seriously discussing” the acquisition of a 25% stake in Reliance Industrial Refining and Petrochemical Business, Reuters reported.

Reported that the sale of minority stakes may earn about $10 billion to $15 billion, the Indian company’s refinery and petrochemical business valuation is about $55 billion to $60 billion.

The Times of India quoted people familiar with the situation as saying that the valuation agreement could be reached around June. The report adds that Goldman Sachs is said to be authorized to advise on proposed transactions.

Saudi Arabian Crown Prince Mohamed Ben Salman expressed his strong interest in India’s largest refinery after visiting India in February, saying he expected more than $100 billion worth of investment opportunities in the next two years.

In addition, Amin Nasser, chief executive of Saudi Ami, met with Mukesh Ambani, chairman of Reliance Group, to discuss Ami’s business, including crude oil, chemicals and non-metals.