Oil prices plummet and geopolitical tensions loom—can the rubber market catch a break after three consecutive declines?

⑴ The Kuala Lumpur rubber market closed lower on Friday, with the SMR 20 contract dropping by 7.5 sen to 757 sen/kg, and bulk latex falling by 1 sen to 578.5 sen/kg. Traders attributed the decline mainly to Brent crude oil continuing to fall by 0.28% to $67.33 per barrel, coupled with weak regional rubber futures resonating with the downturn. ⑵ Oil prices had previously plunged nearly 3%, as expectations of oversupply and rising inventories continued to weigh on sentiment. Meanwhile, Japanese rubber futures fell for a third consecutive day, and liquidity in the Chinese market dried up ahead of the Spring Festival holiday, intensifying selling pressure. ⑶ Escalating tensions in the Middle East became another source of pressure. Media reports indicated that the US is deploying a second aircraft carrier to the region, with geopolitical risk premiums and pessimism on the demand side forming a double blow. According to Benchmark Mineral Intelligence, global electric vehicle registrations in January plummeted by 3% year-on-year, directly impacting the outlook for rubber consumption, due to reduced subsidies in China and policy changes in the US. ⑷ However, the decline was limited by support from positive US economic data and stable inflation expectations, as the market continues to weigh the cushioning effect of macroeconomic resilience on industrial products. ⑸ Next Monday marks the Chinese Spring Festival holiday, with the Kuala Lumpur market closed from February 16 to 18 and trading resuming on the 19th. Pre-holiday capital outflows may lead to converging volatility, but the unresolved imbalance in oil market supply and demand and ongoing geopolitical risks mean that post-holiday restocking pace and electric vehicle policy trends will become key variables in the renewed tug-of-war between bulls and bears.