As a raw material for polyester production, the price fluctuation of crude oil directly determines the cost of polyester. In the past three years, geopolitical conflicts have become one of the most important factors affecting international oil prices. Recently, the situation of the Russia-Ukraine war has turned a corner, and Russian crude oil is expected to return to the international market, which has a sharp impact on international oil prices!

Oil to fall to $60?

According to previous reports by CCTV, on February 12, US Eastern Time, US President Trump had a phone call with Russian President Vladimir Putin and Ukrainian President Volodymyr Zelensky. The two sides agreed to “cooperate closely” on ending the conflict between Russia and Ukraine and to send their respective teams to “immediately start negotiations.”

Citi said in a Feb. 13 report that the Trump administration is working on a peace plan to try to resolve the Russia-Ukraine conflict. The plan could include forcing Russia and Ukraine to reach a ceasefire agreement by April 20, 2025. If successful, the plan could lead to the lifting of some sanctions on Russia, changing the supply and demand dynamics of the global oil market.

The flow of Russian oil has changed dramatically since the outbreak of the conflict. According to Citi’s estimates, Russian oil has added nearly 70 billion tons of ton miles. At the same time, other countries such as India increased their demand for Russian oil significantly, increasing by 800,000 barrels per day and 2 million barrels per day, respectively.

If Western countries ease sanctions on Russia and commit to normalizing trade relations, Russia’s oil production and exports could increase significantly. This will further change the pattern of global oil supply.

On the supply side, the current sanctions imposed by the United States have left about 30 million barrels of Russian oil stranded at sea.

Citi believes that if the peace plan progresses, this stranded oil and the backlog of oil due to the change in trade routes (about 150-200 million barrels) could be released into the market, further increasing supply pressure.

As a result, Brent oil prices will be roughly between $60 and $65 per barrel in the second half of 2025.

Trump’s policies are pushing down oil prices

In addition to the Russian factor, Trump is also one of the downward pressure on oil prices.

A survey of 26 bankers by Haynes Boone LLC late last year showed they expected WTI prices to fall to $58.62 a barrel in 2027, about $10 a barrel below current levels, suggesting banks are preparing for prices to fall below $60 by the middle of Trump’s new term. Trump campaigned on a promise to push shale oil producers to increase production, but it is unclear whether he intends to follow through on that promise since U.S. oil producers are independent companies that determine production levels largely on the basis of economics.

Trump wants to control US domestic inflation by suppressing oil prices, Citi estimates that if Brent crude oil prices fall to $60 / barrel in the fourth quarter of 2025 (WTI crude oil prices are $57 / barrel), and oil product premiums remain at current levels, the cost of US oil product consumption will fall by nearly $85 billion year on year. That’s about 0.3 per cent of US GDP.

What is the impact on the textile market?

The last time the New York crude oil futures (WTI) fell below $60 was on March 29, 2021, when the New York crude oil futures price fell to $59.60 / barrel. Meanwhile, Brent crude futures traded at $63.14 per barrel on the day. At that time, the polyester POY was about 7510 yuan/ton, even higher than the current 7350 yuan/ton.

However, at that time, in the polyester industry chain, PX was still the largest, the price continued to be strong, and occupied the majority of the profits of the industry chain, and the current situation has undergone fundamental changes.

Only from the point of view of the difference, on February 14, the New York crude oil futures 03 contract closed at 70.74 yuan/ton, if it wants to fall to 60 dollars, there is a difference of about 10 dollars.

After the beginning of this spring, although the price of polyester filament has risen to a certain extent, the enthusiasm of weaving enterprises to buy raw materials is still general, has not been mobilized, and the wait-and-see mentality is maintained, and the polyester inventory continues to accumulate.

If crude oil enters the downward channel, it will largely deepen the market’s bearish expectations for raw materials, and polyester inventories will continue to accumulate. However, on the other hand, the textile season in March is coming, the number of orders has increased, and there is a rigid demand for raw materials, which may be able to offset the impact of low crude oil to a certain extent.