1. Oil Prices Retreat from Highs as Geopolitical Premium Unwinds
As of the May 29 close, WTI crude July contract settled at .36/bbl, down .54 or 1.73% from the previous session; Brent crude July contract closed at .12/bbl, down .66 or 1.70%. Both benchmarks hit their lowest levels in nearly six weeks, with WTI posting a monthly decline of 16.86% and Brent falling 17.46%, marking the largest single-month drop since 2020.
| Product | Price ($/bbl) | Daily Change | Monthly Change |
|---|---|---|---|
| WTI Jul | 87.36 | -1.73% | -16.86% |
| Brent Jul | 91.12 | -1.70% | -17.46% |
| SC 2607 | 589.8 CNY | -4.4 CNY | — |
2. US-Iran Talks Drive the Selloff, but Deal Remains Uncertain
The core catalyst for this oil price plunge stems from progress in US-Iran negotiations. Reports indicate that the US and Iran have reached a preliminary framework agreement to extend the ceasefire and ease Strait of Hormuz shipping restrictions, raising market expectations that the channel handling roughly one-fifth of global oil and LNG flows could reopen. However, President Trump has not yet formally approved the deal, and Iranian state media has stated the agreement is not yet finalized, meaning geopolitical risks have not been fully eliminated.
It is worth noting that even if the agreement is ultimately reached, the restoration of Hormuz transit will be gradual. Analysts point out that mine clearance in shipping lanes, repair of damaged infrastructure, restart of idled production, and tanker queue delays will all limit the pace of supply recovery in the near term. Therefore, the current sharp decline in oil prices reflects the squeeze on risk premium rather than an actual improvement in supply.
3. Industry Chain Transmission: Plastic Costs Decline, Demand Support Remains Weak
As the source cost of the plastic industry chain, the significant retreat in crude oil prices is transmitting downstream. SCI99 data shows that among 42 monitored petrochemical products in the week of May 29, 66.7% declined and only 11.9% rose. The Zibo chemical product price index dropped to 833.84, down 0.39% month-on-month. The loosening of cost support combined with persistently weak downstream demand has pushed intermediate products like benzene lower, with polyolefins and PVC following the downtrend noticeably.
From the perspective of industry chain transmission logic, in the crude oil to naphtha to ethylene/propylene to polyolefin chain, the speed of cost decline currently exceeds the pace of demand recovery. Downstream factories remain cautious about raw material procurement, spot trading is thin, inventory digestion is slow, and the combination of declining cost support and demand-side negative feedback suggests plastic prices still have room to fall in the short term.
4. Market Outlook
In the short term, US-Iran negotiation expectations will continue to dominate oil price movements. WTI is likely to consolidate in the -90 range, while Brent may trade in the -94 range. If the agreement is formally signed, oil prices could test the level; if talks break down, a rapid rebound above is possible. For the plastics market, June attention should focus on the supply pressure from reduced PE maintenance shutdowns and whether downstream demand can follow through after the agricultural film off-season. The June plastics market is expected to remain in a weak, cost-driven downtrend, with select products potentially seeing oversold rebounds.
