Crude oil prices hit a four-year low! The warming of Russia-Ukraine peace talks dragged down the oil market, and analysts issue a "short ban" warning

WTI crude oil recently dropped sharply to $54.98 per barrel, while Brent crude also fell below the $60 mark to $58.72 per barrel. This is a rare low since 2021, reflecting market pessimism about supply prospects. Since 2025, WTI has declined nearly a quarter, and Brent’s decline has also exceeded 20%.

Geopolitical Expectations Shift as a Catalyst

News of a potential easing of the Russia-Ukraine conflict has become the latest catalyst. Recent statements from U.S. leaders indicate that the two countries are close to reaching a peace agreement, prompting the market to reassess the geopolitical premium. Once a ceasefire agreement is formed, the market expects U.S. export restrictions on Russian oil to be quickly relaxed, and Ukraine’s strikes on Russian energy infrastructure to come to an end.

Rystad Energy’s analysis suggests this will lead to a large influx of Russian oil into the international market, further exacerbating global oversupply.

Production Increase Potential May Be Overestimated

However, German commercial bank analyst Carsten Fritsch offers a different perspective. He points out that although the war crisis has eased, Russia under OPEC+ quota restrictions is currently operating near full capacity, making significant supply increases difficult. From this angle, “the current oil price decline seems overly extreme.”

Oversupply Situation Difficult to Reverse

Since the beginning of this year, OPEC+ has gradually resumed production, and non-OPEC countries continue to increase output, maintaining a loose global supply stance. At the same time, demand faces challenges—major economies like China and the U.S. show signs of weakening consumption momentum, and the imbalance between supply and demand has pushed oil prices lower.

Technical Warning: Do Not Fight the Trend in Short Selling

Although Ritterbusch & Associates expect the U.S. to face ample supply next month, they issue a clear warning to investors: “In the case of WTI crude oil falling below $55, do not establish any new short positions because technical charts have shown obvious oversold signals.” This indicates that despite weak fundamentals, the extremely low levels also carry rebound risks, and blindly increasing short positions should be avoided.