The oil prices that various countries sell to us.

Iran’s price of RMB 4700 per ton must first be understood within the context of sanctions. According to a June 2026 report by S&P Global, independent refineries in Shandong Province purchased Iranian crude oil, with steep discounts on sanctioned oil being a major reason. At that time, Iranian light crude traded at a discount of USD 1–2 per barrel versus Brent; from January to May, China imported approximately 1.58 million barrels per day—making it Iran’s most stable and largest buyer. This is not simply a ‘friendship price.’ Under sanctions, Iran faces severe constraints on whom it can sell to and how it can receive payment; discounts serve as an incentive for buyers, while RMB settlement and barter deals involving industrial goods form a transaction loop designed to circumvent U.S. dollar restrictions. The low price is real—but it stems from practical pressure. If sanctions are lifted and demand from other buyers rises, will Iranian oil maintain the RMB 4700 price? Probably not. Russia’s RMB 4800 price is likewise not a fixed ‘discounted rate.’ After losing access to European markets, China became a key buyer of Russian crude; overland pipeline transport also eliminates part of the maritime shipping cost, giving Russia pricing and logistical advantages. In 2025, Russia exported 100.72 million tons of crude oil to China—the highest among all suppliers—while Saudi Arabia ranked second with 80.76 million tons and Iraq third with 64.62 million tons. Yet discounts fluctuate with market conditions. By August 2026, the price gap between Russian crude and other sources had narrowed from 15.6% in July to 5.2%; the discount on Urals crude delivered to Chinese ports shrank from USD 4.30 to USD 2.75 per barrel. As Indian purchases declined, Russia gained new sales flexibility—and became less eager to offer steep discounts to Chinese buyers. Today’s ranking does not guarantee tomorrow’s; any shift in sellers’ circumstances immediately affects pricing. Saudi Arabia and the UAE quote higher prices—but their supply volumes and reliability cannot be overlooked. In 2025, Saudi Arabia exported 80.76 million tons to China (ranking second), while the UAE exported 37.51 million tons. Entering 2026, Saudi Aramco lowered its official selling prices (OSPs) for crude destined for Asia: the August OSP announced in July was cut by USD 11 per barrel month-on-month—the largest reduction since May 2020. The signal is clear: Chinese buyers’ purchase applications have dropped to low levels, prompting Saudi Arabia to proactively slash prices amid fears of losing market share. For the first time in years, Middle Eastern crude’s landed price in China has fallen below that of Russian ESPO and Iranian light crude. A higher quoted price does not mean it won’t fall—traditional suppliers, too, must respond to market signals. Brazil exported 47.08 million tons to China in 2025—ranking fifth. Its crude is competitive, but the long voyage from South America erodes part of its price advantage through freight costs. Canadian crude is mostly heavy oil sands crude, high in sulfur content, requiring costly refining; only after the expansion of the Trans Mountain Pipeline has export to Asia become more feasible. U.S. crude faces similarly long Pacific crossings—and trade tensions add further uncertainty. Their relatively high quotations do not mean buyers are simply paying a ‘premium’. Iraq, Mexico, and Libya also occupy distinct positions in the pricing hierarchy.

UAE’s exit from OPEC: The old order collapses; a new game begins! The oil market enters a Warring States era.

After the Strait of Hormuz was blockaded, the UAE’s oil exports suffered a crippling blow. Data shows that the UAE’s crude oil output stood at about 3.42 million barrels per day in February—but plummeted to roughly 1.89 million barrels per day in March—a drop exceeding 50%. What further angered the UAE was that, amid this conflict, it bore the brunt of Iranian strikes—its energy infrastructure and military bases were all hit. Yet its Gulf allies, whom it had counted on, failed to provide sufficiently strong support or protection. This increasingly convinced the UAE that relying on the Saudi-led OPEC ‘ship’ was unreliable—and that it needed to chart its own course. Although the Strait of Hormuz was blocked, the UAE had a contingency plan: the Abu Dhabi Crude Oil Pipeline, which transports oil to Fujairah Port on the Gulf of Oman—bypassing the Strait entirely. With a daily capacity of about 1.8 million barrels, the pipeline is now operating near full capacity. By withdrawing from OPEC precisely when the Strait was blocked, the UAE minimized disruption to global markets while freeing itself from constraints ahead of time—so that once the waterway reopens, it can swiftly ramp up production and seize market share. Its timing was impeccable. Part 02 Short-term outlook: Where is oil headed? Two forces are pulling in opposite directions. How will oil prices move in the short term following the UAE’s withdrawal? In fact, the market has already delivered a remarkably clear answer: bullish factors currently outweigh bearish ones. First, the data. On April 28, Brent June futures closed at USD 109.34 per barrel—up USD 1.11 from the previous trading day; Brent July futures closed at USD 102.77, rising only USD 1.08. The spread between these two contracts reached USD 6.57—a pronounced backwardation in the futures curve. What does this mean in plain terms? Market participants are willing to pay a premium for oil delivered now—but only a lower price for oil delivered months later. The underlying logic is straightforward: the market expects the Strait of Hormuz blockade to persistently constrain supply, keeping near-term prices elevated. Indeed, bearish sentiment triggered by the withdrawal announcement did emerge, and markets worried that UAE’s exit might boost overall supply. Following the news, WTI crude briefly plunged nearly USD 2—but quickly rebounded, closing the day still above USD 99. Meanwhile, Brent crude rose for a seventh consecutive trading day, holding steady near USD 110. Why couldn’t bearish sentiment override the upward price pressure? Because a far stronger factor underpins oil prices—Middle Eastern conflict. Since the outbreak of the Iran war at the end of February 2026, the Strait of Hormuz has effectively been sealed off—severely restricting crude exports from all Persian Gulf littoral states. The UAE, Saudi Arabia, and Iraq have all been forced to slash output dramatically. Statistics indicate that regional daily output plunged by 7–10 million barrels—7% to 10% of global demand. Against this backdrop, even if the UAE announces its withdrawal, its ability to rapidly release additional supply remains extremely limited—for three reasons: first, the waterway remains blocked, preventing oil shipments; second, the Abu Dhabi pipeline is already operating near capacity; and third, restoring field output takes time. All told, the supply disruption risk caused by geopolitical conflict will continue to strongly support oil prices in the near term. While the withdrawal announcement exerts downward pressure, what truly drives oil prices remains the gunfire and explosions on the Middle Eastern battlefield.

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