On March 20, the international energy market experienced sharp volatility, with Brent crude oil prices tumbling sharply and posting a notable single-day decline, easing the upward pressure on oil prices triggered by previous geopolitical conflicts. Recent signs of easing tensions in the Middle East emerged as Israel made positive statements on the safety of navigation through the Strait of Hormuz. Coupled with the US loosening crude oil supply policies, market risk aversion cooled rapidly, and long crude oil funds took profits, driving oil prices lower. Goldman Sachs’ latest forecast predicts a gradual recovery in global oil supply in April, with Brent crude prices likely to drop to the $70 per barrel range in the fourth quarter of 2026. Short-term upside risks for oil prices persist, but a medium-to-long-term correction trend is clear.
Oil price volatility quickly transmitted to downstream industrial chains. The domestic aviation industry took the lead in adjusting prices, with airlines including China Southern Airlines issuing notices to adjust fuel surcharges for international flights: a 100-yuan increase for routes from China to Southeast Asia, 270 yuan for Australia routes, and 250 yuan for US economy class routes, hedging fuel cost pressure through price linkage. Meanwhile, domestic chemical enterprises launched a wave of price adjustments, with prices of plastics, chemical fibers and other chemical products fluctuating in line with oil prices, and cost pressure on midstream and downstream manufacturing industries expected to ease gradually.
The global energy landscape continues to reshape. The US made it clear that it would not deploy troops to the Middle East but would provide financial support for relevant operations, while approving the sale of $4.5 billion worth of THAAD radar systems to the UAE. Geopolitical games will continue to disrupt the energy market. For the domestic market, falling oil prices help ease inflationary pressure, benefit downstream industries such as transportation, chemical manufacturing and aviation logistics, and boost corporate profit margins. It is recommended to watch for changes in price spreads across the energy industry chain and seize performance repair opportunities brought by lower costs.
