Crude Oil Stays Elevated: Geopolitical Deadlock Meets US Inflation Surge - May 16 2026

[Introduction] On May 14, international crude oil futures closed nearly flat, but intraday trading was intensely contested. WTI June futures settled at $101.17/barrel, up $0.15; Brent July futures settled at $105.72/barrel, up $0.09. US-Iran negotiations remain deadlocked, the Strait of Hormuz remains blockaded, and the global crude oil supply tightness persists. Meanwhile, US April PPI surged 6% year-on-year and 1.4% month-on-month, both the highest since 2022, significantly delaying rate cut expectations and suppressing the demand outlook. [Analysis] I. Supply: Strait of Hormuz Blockade Continues The Strait of Hormuz is the critical chokepoint for global crude oil transportation, with approximately 21 million barrels of crude oil passing through daily. Since the US-Iran conflict erupted in February, the strait has effectively been closed, with oil tanker traffic plummeting by over 90%. The UN Secretary-General warned that the Hormuz Strait situation could leave 45 million people facing hunger. Approximately 3-4 million tons of fertilizer trade are disrupted monthly, severely impacting the global agricultural supply chain. OPEC reports indicate that April daily crude oil production fell by 1.7 million barrels, with Iranian production declining 30% since February. The IEA dramatically revised its supply-demand assessment from surplus to deficit, strengthening fundamental support for oil prices. Middle East spot premiums climbed to a one-week high, reflecting tight supply conditions in the physical market. II. Demand: US Inflation Pressures Outlook US April PPI rose 6% year-on-year and 1.4% month-on-month, with energy costs surging 7.8% in a single month and services inflation hitting a four-year high. Although the Federal Reserve chair is being replaced, the market generally believes rate cuts will not begin until September or later at the earliest. The high-interest-rate environment continues to suppress global economic growth and crude oil demand. III. Impact on China's Plastics Industry Crude oil is the fundamental feedstock for polyethylene, polypropylene, PVC and other plastic raw materials. With oil prices fiercely contested around the $100 mark, plastic raw material production costs remain elevated. According to Sci99 data, 80 out of 109 chemical products declined (73.39%), with liquid chlorine falling 28.57%, flexible foam PPG dropping 14.29%, and propylene oxide declining 10.00%. The contradiction between elevated costs and weak demand is increasingly prominent, continuously squeezing profit margins in the plastics industry. Notably, China's MIIT has launched the 2026 industrial energy conservation inspection, with PVC, ethylene and other chemical sub-sectors included in the mandatory inspection scope, which may affect capacity utilization rates and create supply contraction expectations. [Outlook] In the short term, crude oil markets will continue to oscillate between geopolitical conflict and macroeconomic pressures. If the Hormuz Strait blockade persists, oil prices will find strong support; if China-US negotiations achieve breakthroughs or US-Iran tensions ease, oil prices may come under downward pressure. For the plastics industry, enterprises should: 1) Closely monitor the Hormuz Strait situation and China-US trade negotiations; 2) Arrange raw material procurement pace reasonably, avoiding the risk of chasing prices higher; 3) Monitor supply changes in PVC and other products affected by energy conservation inspections. [Data Source] Sci99.com - Commodity Economic Information (20260515), Major Chemical Products Ranking (20260508-0514)