On June 12, international crude oil markets experienced sharp turbulence. Brent crude briefly plunged 6% intraday, closing at $87.33 per barrel, down 3.37%; WTI crude fell below $85 for the first time since April 17, settling at $84.88, down 3.23%. A single-day drop of over 3% is no small move for oil prices that have been oscillating at elevated levels.
Background: Geopolitical Easing and Rule Changes Converge
The sell-off was driven by two key factors. First, a shift in geopolitical expectations—Iran released new details of a potential US-Iran memorandum of understanding, which the market interpreted as a signal of possible sanctions relief, directly triggering crude futures selling. Second, on the trading mechanism side, the CME Group announced it would extend WTI crude trading hours to a 24/7 model, with increased liquidity amplifying price swings at certain moments.
In terms of price action, both Brent and WTI experienced a classic bearish pattern of 'accelerated decline—short-term rebound—renewed weakness' during the session, with intraday ranges exceeding $4 and $5, respectively. Such volatility often indicates that the market is accelerating its repricing of supply-demand expectations.
Industrial Impact: Chemical Fiber Cost Support Weakens
For the textile industry, crude oil is the 'source cost' of the chemical fiber chain. Price trends for core raw materials such as PTA, MEG, polyester filament yarn, and polyester staple fiber lag crude oil by 1-2 weeks but are highly synchronized in direction. The sharp oil price drop on June 12 will directly compress profit margins across the polyester chain over the next two weeks.
Specifically:
- Polyester filament yarn: Current POY, FDY, and DTY prices are already at mid-year levels. If oil continues to weaken, the collapse of cost support may accelerate destocking among downstream weaving mills, driving yarn prices further down.
- PTA segment: Processing margins are already under pressure. Falling oil prices will drag down PX prices, compressing PTA's pricing anchor, and polyester plants may turn cautious in procurement.
- End-use fabrics: Greige fabric prices tend to react with a lag, but if export orders are locked in during this window, exporters may face the double risk of falling raw material and finished product prices.
Importantly, this oil price decline is not driven by demand collapse but by geopolitical factors. This means that if negotiations reverse, oil prices could rebound quickly. Textile companies should avoid betting heavily on a one-way trend.