Last Friday, Brent crude oil July contracts closed at about $103.54 per barrel, with the weekly trend still under clear pressure. The current market is caught in a deep mismatch between an "epic supply gap" and "preemptive pricing of peace expectations," with a very sharp tug-of-war between bulls and bears.

🔥 Core contradiction: supply cliff vs. peace expectation pricing

From the supply side, the daily supply of approximately 14 million barrels of oil through the Strait of Hormuz continues to disconnect from the market, with global crude oil and refined product inventories being consumed at a record rate of 11 to 12 million barrels per day. As of the week of May 8, U.S. commercial crude oil inventories sharply decreased by 4.3 million barrels, far exceeding the market expectation of 2.1 million barrels. The extremely depleted inventory base provides strong physical support for oil prices.

From the valuation perspective, last week, a false report from Middle Eastern media claiming that "a draft agreement has been finalized" once caused Brent to plummet from $109.3 to $102.17, indicating that the market has begun to significantly lower risk premiums in advance of peace signals.

🔑 Key points of focus

Trump characterized the negotiation outlook as "about half," with both the U.S. and Iran still sharply divided on issues of nuclear material disposition and Strait passage controls. Both sides are expected to finalize the details of a "memorandum of understanding" within 30 to 60 days.

The short-term directional decision will heavily depend on any substantive signals from the negotiation arena this week. Until then, the market is likely to remain volatile and weak.