【MACRO Insight】Oil prices fell to the 2025 low, speculators' attitude turned cold, and oil supply us

Recently, global oil prices fell to a 2025 low, speculators turned cold, and the market was no longer so optimistic about the outlook for crude oil. Net long positions in the U.S. benchmark WTI crude oil fell for the fourth consecutive week, falling to the lowest level since October last year. The corresponding decline in net long positions in the global benchmark Brent crude oil was the largest since December last year, falling for the third consecutive week. According to data from ICE Futures Europe and the U.S. Commodity Futures Trading Commission, both the reduction in long positions and the increase in short positions drove the trend.

Crude oil was sold off amid a range of drivers, with traders concerned that U.S. tariffs and talks on the Ukraine conflict could affect market dynamics. In addition, Iraq's semi-autonomous Kurdistan region could resume exports, although OPEC+ may delay plans to increase production. "The latest positioning data reflects recent negative sentiment," said Warren Patterson, head of commodity strategy at ING.

At the same time, the total open interest of WTI crude oil in the United States also declined, and even after a small recovery, it is still close to the lowest level in three months. As a series of executive measures by US President Trump have left traders at a loss and dimmed the demand outlook, WTI crude oil recorded five consecutive weeks of declines as of the close of last Friday, the longest losing streak since the end of 2023, fell to the lowest closing price so far this year, and a key technical level was broken, accelerating the weakening of the market outlook. WTI crude oil fell nearly 3% last Friday, closing at $70.40 a barrel, the lowest settlement price since December 26 last year.

Against the backdrop of falling oil prices, Iraqi Deputy Oil Minister Bassim Mohammed recently said that once oil transportation is restored, 185,000 barrels of oil will be exported from the Kurdish oil fields every day through the Iraq-Turkey pipeline, and gradually increased to 400,000 barrels per day. Although there is no specific timetable, the Iraqi Oil Ministry said that all procedures for resuming exports from the Iraq-Turkey oil pipeline have been completed. The production capacity of the Kurdistan region's oil fields is 300,000 barrels per day, part of which is used domestically, and the remaining 185,000 barrels per day will be used exclusively for export.

As part of the OPEC+ agreement, Baghdad is obliged to cut crude oil production, while US President Trump has called on OPEC+ to lower oil prices. And according to Reuters, the Trump administration is putting pressure on Iraq to allow the Kurds to restart oil exports, otherwise it will face sanctions along with Iran. The increasing pressure from the new US government is the main reason why Iraq announced the resumption of the above exports. The US government said it hopes to isolate Iran from the global economy and eliminate its oil export revenue to slow down Iran's development of nuclear weapons. Iran believes that its neighbor and ally Iraq is crucial to its economic vitality amid sanctions.

Trump wants Iraq's prime minister to sever economic and military ties with Iran , and Iraq's announcement about resuming exports seemed hasty, without details on how it will address technical issues that need to be resolved before exports can restart. Iran has considerable military, political and economic influence in Iraq through its powerful Shiite militias and the parties it supports in Baghdad. The timing of the increased US pressure comes at a time when Iran is weakened by Israel's attacks on its regional proxies.

Trump also came to power promising to lower energy costs for Americans. A sharp drop in Iranian oil exports could push up oil prices, and in turn, gasoline prices worldwide. The resumption of Kurdish exports would help offset some of the loss to global supply from reduced Iranian exports, but it would only make up a small portion of Iran's more than 2 million barrels of crude oil and fuel shipped per day. However, Iran has proven adept in the past at finding ways to circumvent U.S. sanctions on its oil sales.

The decline in global oil prices and the change in speculators' attitudes reflect the market's concerns about crude oil supply and demand. Iraq plans to resume oil exports from the Kurdish region, and despite technical and political challenges, this move may have a certain impact on the global crude oil market. In addition, the pressure from the United States on Iraq and the sanctions on Iran have further complicated the situation. In the future, the market will continue to pay attention to Iraq's export plans and OPEC+'s policy trends, as well as the further impact of these factors on oil prices.