A piece of news stirred up the international crude oil market.

On May 15, international oil prices continued to fall, and WTI crude oil futures and Brent crude oil futures prices both fell by more than 4%. Some analysts say that the geopolitical situation is the main factor in the decline in oil prices. According to the latest news, Iran's top leader senior adviser Ali Shamkhani said that Iran is ready to sign a nuclear agreement with the United States under certain conditions in exchange for lifting economic sanctions.

In its latest report, Citi said that there is a "high possibility of reaching an agreement" between Washington and Iran, which may increase Iran's crude oil production to more than 4 million barrels per day and release oil reserves.

On May 15 local time, US President Trump said in Doha, the capital of Qatar, that Iran has agreed to some conditions and that he will urge Iran to reach an agreement without obtaining nuclear weapons. The United States is in serious negotiations with Iran to achieve long-term peace. "I believe we are close to reaching a deal," Trump said.

Suddenly diving

On May 15, Beijing time, international crude oil prices continued to fall, and WTI crude oil futures and Brent crude oil futures prices both fell by more than 4%. As of 23:10, WTI crude oil futures fell by 2.99%, at US$61.26 per barrel; Brent crude oil futures prices fell by 2.87%, at US$64.19 per barrel.

Some analysts say that the geopolitical situation is the main factor in the decline in oil prices. According to NBC, Iran's top leader senior adviser Ali Shamkhani said Iran is ready to sign a nuclear agreement with the United States under certain conditions in exchange for lifting economic sanctions.

According to reports, Ali Shamkhani said Iran would promise to never create nuclear weapons, destroy highly enriched uranium stocks that can be used for weaponization, agree to enrich uranium only to the lower levels required for civilian use, and allow international inspectors to monitor the process in exchange for the immediate lifting of all economic sanctions on Iran.

Asked whether Iran would like to sign the agreement immediately if these conditions were met, Ali Shamkhani said, “Yes.” His remarks seemed to be the clearest public statement by the core circle of Iran’s supreme leader to date on the expectations and willingness of Iran to reach an agreement.

Citi believes that there is a "high possibility of reaching an agreement" between Washington and Iran, which may increase Iran's crude oil production to more than 4 million barrels per day and release oil reserves.

Citi raised its three-month price estimate of Brent crude on Wednesday to $60 a barrel, but the average estimate of the second and third quarters remained at $62 and $63 respectively, and is still expected to decline in the future because "the possibility of the United States reaching a nuclear deal with Iran is high."

The bank just cut its three-month estimate for Brent crude from $60 to $55 the previous week.

Citi warned that if diplomatic efforts fail, the Iranian nuclear issue may escalate tensions and Brent crude oil prices could rise above $70.

Citi pointed out that after the tariff agreement was reached, risk intentions generally rose. However, the bank warned that market peace of mind “may be short-lived” due to fiscal tightness in the U.S. and the weak U.S. hard data (quantitative economic indicators).

Refineries are another major factor supporting oil prices in the near future. Citi said, "The residual fuel oil cracking rate remains high, supporting the global profit margin for mild hydrocracking and refining." Citi added that higher profits may stimulate higher capacity utilization or hedging activities, temporarily supporting Brent oil prices.

In addition, the increase in production exceeding expectations by "OPEC+" has also caused a sharp drop in international oil prices.

Citi said OPEC+ agreed to increase production by 400,000 barrels per day in June, which surprised the market, with the organization's third-quarter output forecast being raised to an excess of nearly 600,000 barrels per day. Meanwhile, OPEC+'s gradual cessation of production cuts and political turmoil in Libya threatens exports of light and low-sulfur crude oil, which may widen the Brent-Dubai swap spread.

Trump issued a "last warning"

On May 13 local time, Trump said that Iran is the "most destructive force" in the Middle East. He accused Iran of creating instability in the Middle East and warned that the United States would never allow Iran to obtain nuclear weapons.

Trump started his trip to the Middle East this week, and he made the remarks at an investment summit in Riyadh, Saudi Arabia.

Trump said this is not only a "last warning" to Iran, but also a diplomatic opportunity. He said Iran must choose between “chaos and terror” and “the path to peace.”

Iran has repeatedly denied allegations that it incites turmoil in the Middle East.

Trump said he is willing to reach a new deal with Iran, but only if Iranian leaders must change their existing routes.

"I hope to reach an agreement with Iran," Trump said. "But if the Iranian leader rejects this olive branch... we have no choice but to put pressure on the limit."

Trump stressed: "Iran will never have nuclear weapons." He also said that his negotiation proposals will not exist indefinitely.

During his first US president from 2017 to 2021, Trump was very tough on Iran and adopted a policy of extreme pressure on the country. He also announced in May 2018 that the United States would withdraw from the Iran nuclear deal.

According to a UN report at the end of February this year, Iran has significantly increased weapons-grade enriched uranium since the end of last year and has the capacity to produce six nuclear weapons.

Weapon-level enriched uranium refers to enriched uranium with an abundance of 60%, which can quickly increase to more than 90% of the abundance required for manufacturing nuclear weapons. Therefore, it is considered to be a highly concentrated uranium close to weapon-level.

According to the Islamic Republic of Iran and Al Jazeera, Iranian President Pezekichiyan delivered a speech through Iran's state TV on the 14th, responding to US President Trump's recent remarks about Iran, saying that his remarks exposed "cognitive flaws" and "he lied that Iran is the source of turmoil and a threatening factor, and knew nothing about the spirit and character of the Iranian people."

Pezeshiziyang stressed, “Iran will not bow to bullies.”

Earlier in the day, Iranian Foreign Minister Aragzi said that over the past 40 years, the United States has hindered Iran's development through sanctions, pressure, military and non-military threats. The United States and its hegemony policies are the root of Iran's economic hardship, and the United States' attempt to impose a non-independent and compliant regime is "against the dignity of the Iranian people."

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[Editor in charge: Xie Wei PF123]