Crude Oil Plunges Over 5% as US-Iran Negotiation Signals Hit Market, Plastic Raw Material Cost Support Crumbles
Market Daily — May 25, 2026
On May 25, the international crude oil market suffered a massive selloff. WTI July contract plunged 5.42% to $91.36/barrel; Brent July contract fell 5.03% to $95.17/barrel, both hitting lows not seen since May 7. The two benchmark crudes extended last week's cumulative declines of 8.4% for WTI and 5.2% for Brent.
Crude Oil Market: Positive US-Iran Negotiation Progress, Supply Disruption Easing Expectations Rise
US President Trump stated on social media on May 24 that negotiations with Iran are proceeding "in an orderly and constructive manner." On the same day, Omani and Iranian representatives discussed principles for regulating Hormuz Strait navigation under international law in Muscat, exchanging views on ensuring shipping, trade, and supply chain security. The positive signals drove the market to quickly price in expectations of resumed strait transit, with oil prices falling over 5% in a single day.
However, significant disagreements remain. Iran's Supreme Leader has ordered that near-weapons-grade enriched uranium must not be shipped abroad, and Tehran has clear differences with Washington on uranium stockpile and strait control issues. US Secretary of State Rubio said negotiations show "some positive signs" but emphasized substantial work remains. The market faces mixed signals with heightened volatility.
Additionally, OPEC+ plans to discuss a 188,000 bpd production increase for July at its June 7 meeting, and the US Treasury has granted a 30-day waiver on Russian seaborne oil sanctions, further loosening supply. However, UAE officials note that even if the conflict eases, strait oil transport volumes are unlikely to fully recover before Q1-Q2 2027.
PVC Market: Bottoming Out, Main Futures Contract Up 2%
On May 25, the PVC main futures contract rose 2% intraday to 4,940 CNY/ton, recovering from last week's low of 4,853. Spot market: carbide-based SG-5 PVC ranges 4,700-5,200 CNY/ton. Supply-side maintenance increases are easing pressure; demand has recovered to normal levels but with limited incremental growth. Short-term outlook: weakening crude cost support offsets supply contraction floor, PVC expected to remain range-bound with a soft bias.
PE Market: Dual Weak Supply and Demand, Stable but Declining
Polyethylene (PE) market continued its weak pattern this week with further price declines. Supply: multiple domestic petrochemical plants have restarted, increasing bearish sentiment. Demand remains subdued — downstream factories are hesitant, operating rates stay low, and transactions are sluggish. Ethylene monomer prices also fell with crude: CFR Northeast Asia at $1,079-1,080/ton, down $61 from early week. Short-term PE market likely to remain stable but soft.
PP Market: Narrow Range, Relatively Resilient
Polypropylene (PP) main futures contract at 8,854 CNY/ton, showing narrow range movements and relative resilience. Supply operations stable, essential demand providing support, but overall trading atmosphere remains ordinary.
Market Outlook
US-Iran negotiation progress is the market's biggest variable. If strait transit restoration expectations continue to strengthen, oil prices have further downside; but if negotiations stall, geopolitical risk premium may return rapidly. Plastic raw material cost support continues to crumble, though maintenance season supply contraction provides some floor. Short-term outlook: plastic markets likely to remain weak and range-bound, closely watching US-Iran negotiation outcomes and the OPEC+ June meeting.
