【Trend Report】 Middle East Conflict Blocks Key Strait; Geopolitical Risk Premium Expected to Support High Prosperity in the Petrochemical Sector

The three major Chinese A-share indices showed mixed performance today. By the close, the Shanghai Composite Index rose 0.47%, the Shenzhen Component Index fell 0.20%, and the ChiNext Index declined 0.49%. The combined trading volume of the Shanghai, Shenzhen, and Beijing markets exceeded 3 trillion yuan, a significant increase of over 500 billion yuan compared to the previous trading day. Industry sectors experienced more declines than gains, with precious metals, oil and petrochemicals, aerospace equipment, ground military equipment, and shipping ports leading the gains. Advertising, film and television theaters, media, telecommunications services, and gaming sectors saw the largest declines. In individual stocks, over 1,100 stocks rose, with nearly 100 hitting their daily limit-up.

On February 28, the United States and Israel launched a large-scale joint attack on Iran. Due to the conflict, shipping through the Strait of Hormuz has come to a halt, with many global oil companies suspending vessel passage through the area. The Strait of Hormuz is a critical chokepoint for global energy trade. Approximately 20.3 million barrels of oil and other liquid fuels pass through the strait daily, accounting for about 20% of global consumption and roughly 27% of global maritime trade. As a result, international oil prices surged on Monday morning, with Brent crude futures jumping 13% to $82 per barrel, and WTI crude futures rising over 10% to $75 per barrel.

According to CCTV, analysts believe that the military strike by the US and Israel on Iran will disrupt global energy supply expectations, with the Strait of Hormuz being the most critical link in the situation. If the situation escalates, although the strait may not close entirely, it will face significant threats. Under such circumstances, insurance companies will reassess risks and increase oil tanker insurance costs, potentially slowing oil deliveries. Global supply could tighten even without a reduction in oil output, pushing oil prices up to $75–80 per barrel.

Everbright Securities states that the geopolitical situation in the Middle East has fully escalated, threatening the security of global oil transportation and increasing geopolitical risk premiums, which are expected to continue driving up oil prices. China Merchants Securities points out that recent frequent geopolitical conflicts have directly increased the risk premium for crude oil and reshaped global energy flow patterns through chain reactions.

Everbright Securities: Rising Geopolitical Risk Premiums Likely to Continue Supporting Oil Prices

The geopolitical situation in the Middle East has fully escalated, threatening the security of global oil transportation through the Strait of Hormuz. The increase in geopolitical risk premiums is expected to persist and push oil prices higher. By 2026, the “Three Oil Giants” will continue maintaining high capital expenditures, expand natural gas markets, and accelerate refining and chemical transformation, aiming for long-term growth across oil price cycles. Oil service companies will benefit from high upstream capital spending domestically and the performance release of overseas operations, with improved operational quality. Despite macroeconomic uncertainties dampening demand, high marginal costs of US shale oil and OPEC+’s pause in production increases will support oil prices at mid-to-high levels, likely benefiting the petrochemical sector.

China Merchants Securities: Recent Frequent Geopolitical Conflicts Have Directly Elevated Oil Risk Premiums

Recent frequent geopolitical conflicts have directly increased the risk premiums for crude oil and reshaped global energy flow patterns through chain reactions. First, ongoing tensions in the Middle East and Russia-Ukraine have heightened fears of supply disruptions, causing oil prices to oscillate upward and stimulating upstream exploration and development in the oil service industry. Second, affected by geopolitical tensions, the shipping market has also become volatile, with the Baltic Dry Index (BDTI) reaching new highs in recent periods.

CITIC Construction Investment: International Oil Prices and Precious Metals May Remain Strong

Recent external and internal disturbances have increased, with ongoing tug-of-war between bulls and bears. The spring market phase is expected to end, shifting from an upward trend to a consolidation phase. The short-term resolution of US-Iran tensions is unlikely, so international oil prices and precious metals may continue to stay strong, with long-term premiums for strategic assets.

Guolian Minsheng: Short-term Oil Price Uptrend Likely to Persist

Under geopolitical influences, the short-term upward trend in oil prices is quite certain. Attention should be paid to OPEC+’s production meeting in early March for potential further increases. If the US-Iran situation expands to involve the Strait of Hormuz and other Middle Eastern countries, there is significant room for oil prices to rise further.

Orient Securities: Shipping Market Prosperity May Continue to Improve Amid Current Middle East Tensions

The escalation of US-Iran tensions may drive further US sanctions on Iran, with three possible scenarios for the future of the shipping market. In the final analysis, the shipping sector’s prosperity may continue to improve under current Middle East tensions, and oil transportation options related to geopolitical risks could accelerate their realization.

Goldman Sachs: Weekend Oil Market Already Priced in $18 per Barrel Risk Premium

The weekend oil market has already incorporated an $18 per barrel risk premium, equivalent to the expected impact of a complete six-week blockade of the Strait of Hormuz. The firm’s analysts also noted, “While our risk bias is upward, historical evidence shows that price surges caused by geopolitical shocks and temporary supply disruptions are often short-lived.”

(This article does not constitute investment advice. Investors operate at their own risk. The market carries risks; please invest cautiously.)

(Source: Eastmoney Research Center)