Domestic futures markets saw the energy and chemical sector collectively weaken once again today. As of press time, main contracts for crude oil and asphalt futures fell over 4%, while main contracts for ethylene glycol, polyester staple fiber, and methanol futures dropped more than 3%. Contracts for PTA, polypropylene, propylene, styrene, plastics, and pure benzene followed the decline, putting clear pressure on the sector.
Commenting on the sharp drop in the energy and chemical sector, Ye Haiwen, manager of the Energy and Chemical Research Center at Guotai Junan Futures Research Institute, attributed the decline mainly to eased geopolitical tensions, lower costs, and weak demand. Recently, the Middle East has been sending dense signals of de-escalation, with Saudi crude shipping capacity set to recover by half, and the potential for normal navigation through the Strait of Hormuz to resume, prompting a rapid unwinding of geopolitical risk premiums in the market. If the Strait of Hormuz opens on a temporary basis, the tight supply-demand pattern in Asia's energy and chemical market in the fourth quarter could improve notably.
"Weak demand has further exacerbated the market's downward momentum. Pre-holiday stockpiling by downstream buyers ahead of the Mid-Autumn Festival and National Day has largely concluded, yet the traditional 'golden September, silver October' peak consumption season is showing lackluster demand. Although upstream players are proactively cutting prices to move goods, end users are only maintaining just-in-time purchasing with no bulk stocking activity, leaving the market with a thin trading atmosphere," Ye Haiwen said. He added that in the short term, the combination of supply recovery expectations and seasonal demand declines is likely to keep the energy and chemical sector fluctuating within a weak range, with close attention needed on evolving Middle East geopolitical developments.
Xiao Haiming, an energy and chemical researcher at Zhongtai Futures, analyzed that the easing of geopolitical tensions is the primary factor behind the current weakness in crude oil and energy prices. However, the situation in the Middle East has not fully improved, and the resumption of navigation through the Strait of Hormuz could face setbacks, meaning geopolitical risks have not been completely cleared. "Current inventories of refined products and chemical products are relatively low, which still provides some support for crude oil prices," he said.
On the geopolitical front, according to reports, Iranian Foreign Ministry spokesman Baghaei stated on the 23rd that during the general debate of the 81st UN General Assembly held in New York on the 22nd, Iran held talks with the US side through Qatar as mediator, conveying Tehran's conditions for reopening the Strait of Hormuz. Speaking to the Islamic Republic of Iran Broadcasting in New York that day, Baghaei said Iran's conditions for reopening the strait include the US permanently ceasing military operations against Iran and its regional allies, lifting the maritime blockade and all sanctions on Iran, returning Iran's frozen assets, and compensating for damages. According to Iranian media, the talks were held "at the request of the US side," and Iran agreed to meet with US presidential envoy Witkoff in order to communicate "Iran's conditions for reopening the Strait of Hormuz."
Witkoff wrote on social media on the evening of the 22nd that a "long meeting" had been held with the Iranian delegation through the mediator, expressing hope that the discussions would be "constructive" and lead to "positive progress." US President Trump confirmed on the 22nd that US and Iranian officials held a three-hour meeting in New York that day, with plans to meet again soon. It was reported that Witkoff and Trump's son-in-law Kushner attended the talks. The general debate of the 81st UN General Assembly opened at UN headquarters in New York on the 22nd. In his opening remarks that day, Trump said Iran could be "destroyed" quickly, but did not rule out the possibility of reaching an agreement to end the conflict after the US congressional midterm elections in November.
In a related development, Saudi Arabia denied purchasing oil tankers and dismissed claims that such a move had driven up Iraqi crude shipping costs. According to reports, the Saudi Energy Ministry issued a statement on the 22nd denying that the kingdom had bought 25 oil tankers, calling Iraqi claims to that effect inaccurate. Iraqi sources had said on the 21st that Iraqi Oil Minister Basim Mohammed Khudair al-Abadi told parliament that Saudi Arabia had purchased 25 tankers worth approximately $4.5 billion, which allegedly caused a sharp rise in Iraqi crude shipping costs, with freight rates jumping from about $26 per barrel to around $37 per barrel. In its statement on the 22nd, the Saudi Energy Ministry said Khudair's claims about Saudi tanker purchases were unfounded, and that the sharp increase in shipping costs stemmed from factors such as heightened regional tensions, disrupted shipping through the Strait of Hormuz, and significantly higher shipping risks and insurance premiums.
The Strait of Hormuz is one of the world's key energy transport chokepoints, handling roughly one-fifth of global crude oil and refined product shipments. Before the outbreak of the Iran conflict in February of this year, approximately 125 large commercial vessels, including energy carriers, passed through the strait daily. At present, transit through the Strait of Hormuz remains hampered, with vessel traffic well below pre-conflict levels. Analysts note that Iraq is among the countries most severely affected by the strait's navigational situation.