Latest Updates: US-Iran Conflict Developments! What Will Prolonged High Oil Prices Bring? What Major Events Should We Watch Next Week?

Value Line | Source

Next Week Preview | Column

Bian Jiang | Author

Qian Tang | Editor

Value Line Guide

The conflict between the US and Iran continues to escalate and intensify over the weekend!

The market’s expectation of a “lightning strike” has shifted toward a prolonged “long-term quagmire,” with the rise in oil prices gradually becoming a high-probability event.

This will reshape global asset pricing logic: on one hand, high oil prices suppress valuations of tech growth stocks through inflation expectations; on the other hand, they are reactivating the investment value of “physical assets” represented by energy and resources, with clear benefits for sectors like coal, green electricity, and oil services.

From this week’s A-share top gainers and losers, funds have spoken with their feet—power construction, coal chemicals, and new energy lead the market. Under the “consumption war” expectation, the market is shifting from chasing “growth narratives” to embracing “hardware realities.”

Next week, besides war, what major global events are worth watching?

The Lightning Strike Evolves into a Consumption War

The direction of the US-Iran conflict remains a key focus for global investors.

According to the latest updates, the conflict continues to be tense.

The US is deploying more Marine Corps units and warships to the Middle East. After Iran’s new hardline leadership took power, it has blocked the Strait of Hormuz and continued strikes on US bases and Israel’s homeland.

The US embassy in Iraq’s air defense system was destroyed, and the US is offering rewards for information on Iran’s new Supreme Leader. Iran is considering allowing limited oil tanker passages through the Strait of Hormuz, provided the oil is settled in RMB.

Macro economist Ren Zeping analyzes:

From the battlefield situation, while the US-Israel alliance initially achieved some military gains—destroying many Iranian military targets and weakening its air defenses—they failed to cripple Iran’s command system or eliminate its counterattack capabilities. High-intensity military operations are rapidly depleting precision-guided munitions, raising concerns about the US military’s long-term combat capacity.

Iran’s resolve and resilience exceeded expectations. After leadership setbacks, it quickly completed a power transfer and continues to counterattack through asymmetric tactics, striking US bases and missile defense systems, and expanding the conflict across multiple fronts via the “Arc of Resistance.” This small-scale, high-cost strategy gradually offsets the US and Israel’s technological military advantages.

The ultimate outcome of the war depends on multiple factors. Domestic US political pressure is especially critical. With the midterm elections approaching in November, rising war costs are fueling public dissatisfaction. Rising oil prices further strain livelihoods, pushing Trump to seek a face-saving end. Meanwhile, the sustainability of ammunition stocks, Iran’s underground production capacity, and the expansion of proxy wars will influence the duration and outcome of the conflict.

Overall assessment: As both sides continue to exhaust resources, future conflicts may shift from high-intensity confrontation to military stalemates, political bargaining, and third-party mediation. Both sides, after paying a heavy price, may reach a fragile equilibrium. The US and Israel might reduce military intensity under the pretext of “achieving phased goals,” while Iran consolidates its regional influence and internal regime stability.

The challenge for the US-Israel alliance is how to control losses within a limited timeframe and avoid falling into a long-term quagmire; Iran’s core strategy is to sustain resistance, dragging the war into an unsustainable consumption phase for the opponent, thereby gaining better negotiation leverage.

Some market observers also comment:

What we see now is a declining influence of the US and an Iran that responds with “you hit me, I hit back.” In other words, the constraints of the old order weaken, but the feedback loop of direct confrontation intensifies, making the situation increasingly prone to escalation and retaliation.

If we accept that US influence is marginally declining and that its future may follow a “Monroe Doctrine” style North American retreat, then the US’s optimal strategy has never been to expand the battlefield but to withdraw from it. For the US today, the priority is to rest, rebuild industrial capacity, and promote manufacturing return, rather than continuing to add positions externally after being locked in high-cost lines.

What does high oil price bring?

As the market gradually accepts the shift from “lightning war” to “consumption war” in US-Iran conflict expectations, the long-term rise in the oil price center becomes a core variable affecting global asset valuation. This not only makes fuel more expensive but also, through complex transmission chains, reshapes capital market valuation systems and industry structures.

1. Suppression of high-tech valuations

Long-term high oil prices significantly suppress valuations of tech stocks, especially growth-oriented tech stocks. The transmission path resembles that of the Russia-Ukraine conflict in 2022.

Analysis from Dongwu Securities indicates that the current transmission to A-shares is similar to 2022: rising oil prices → imported inflation expectations → marginal tightening of Fed policies → deterioration of US dollar liquidity → pressure on growth stocks. The current industry trend and liquidity environment are quite similar to 2022, which marked the start of the Fed’s rate hike cycle. By 2026, the cycle is nearing its easing phase, with real interest rates still high. Elevated fiscal deficits have already exerted upward pressure on inflation, and geopolitical oil shocks could further disrupt inflation expectations or even pause rate cuts.

In terms of industry trends, both periods’ core growth sectors face mismatches between growth momentum and capital expenditure. In 2022, the new energy sector transitioned from rapid growth to maturity, weakening in prosperity; now, AI agent penetration is accelerating, but deep application in the real economy has yet to scale, leading investors to question whether upstream hardware spending can deliver profits. If rising oil prices trigger renewed inflation and liquidity concerns, the logic of tech growth stocks will be challenged, and valuations will come under pressure.

2. Which sectors will benefit or resist?

High oil prices are not entirely negative; they will reshape profitability patterns along three main lines: cost-driven effects, substitution effects, and industry restructuring. Based on analyses from Huatai Securities and others, four sectors show notable benefits or resilience:

First: Direct beneficiaries — Oil and natural gas exploration

This is the most direct and certain beneficiary sector. Upstream resource companies with reserves see their product prices rise directly, significantly expanding profit margins. Since the start of the year, the Shenwan Oil & Petrochemical Index has led the market, reflecting this logic.

Second: Substitution effects — Coal, new energy vehicles, green electricity

Prolonged high oil prices reinforce energy security awareness and accelerate fossil fuel substitution.

Coal: As a dominant domestic energy source, its strategic value as an energy security “ballast” becomes more prominent, and the economics of coal chemical routes improve.

New energy vehicles: Huatai Securities notes that demand for fuel vehicles may face downside risks, but energy efficiency advantages could offset this. High oil prices will widen the lifecycle cost gap between traditional and electric vehicles, stimulating EV consumption.

Green electricity (photovoltaics, energy storage, hydrogen): GF Securities points out that rising oil and gas prices emphasize energy security, making green energy substitution urgent. PV and energy storage are not only economical but also strategic insurance for energy supply. High oil prices will boost PV installation economics and accelerate the development of frontier fields like green hydrogen.

Third: Strong pass-through capacity — Oil services, cement, chemical raw materials

These midstream industries can effectively pass increased upstream costs downstream and may even benefit from structural opportunities created by rising oil prices.

Oil services: High oil prices will stimulate oil and gas companies to increase capital expenditure, directly boosting demand for oilfield services and equipment.

Coal chemicals: When oil prices exceed certain levels, the cost advantage of coal-based routes (e.g., coal-to-olefins, coal-to-oil) becomes evident. Domestic coal prices are controlled by supply stabilization policies, allowing for manageable increases and expanding profit margins. Additionally, Middle East tensions may impact overseas chemical supply, creating opportunities for domestic firms.

Chemical raw materials: Some chemical products are highly correlated with oil prices, and companies capable of cost transfer will see their gross margins positively linked to oil price movements.

Fourth: Defensive essential consumer goods — Livestock, retail

These sectors have low sensitivity to macroeconomic cycles and energy prices, with relatively rigid demand. Amid inflation expectations and market volatility driven by high oil prices, sectors like livestock, food & beverages, and retail tend to be safe havens, showing strong resilience.

A-shares Weekly Trading Data: Where are the Market Mainlines?

This week’s A-share market cap gain rankings

1. Top 10 companies with over 50 billion market cap this week

2. Top 10 companies with 10-50 billion market cap this week

3. Top 10 companies under 10 billion market cap this week

4. Top 10 decliners this week

Last week, Value Line discussed using coal chemical sectors benefiting from oil as a risk hedge against high valuations in tech, highlighting Baofeng Energy, which rose 21% this week.

Data shows that the top gainers this week are mainly in power construction, coal chemicals, and new energy green power sectors, driven by power shortages and high oil prices.

Additionally, wind and lithium batteries received recent news boosts:

Recently, the UK government announced the removal of 33 wind turbine component import tariffs, reducing tariffs on key parts like blades and cables to zero. This aims to accelerate offshore wind projects in the North Sea, potentially mobilizing over 10 billion pounds of investment, benefiting domestic wind power companies with cost and capacity advantages.

Dajin Heavy Industry’s bullish logic: The company leads in delivering offshore wind infrastructure in Europe and has formed strategic, long-term partnerships with major European offshore wind developers. Its self-developed high-end deck transport vessels can meet global wind farm transportation needs. The first 40,000-ton deck transport ship was launched in October 2025 at its Panjin shipyard, with plans to use its own vessels for overseas shipping in 2026. The company has also established ports in Denmark, Germany, and Spain, with its own ships, shipping, and terminal facilities to enhance delivery capacity and profitability.

On March 12, the US International Trade Commission (USITC) ruled that active anode materials from China, sold below fair value and subsidized by the Chinese government, did not significantly hinder US industry development. This reverses the earlier US Department of Commerce’s anti-dumping (93.5%-102.72%) and countervailing (66.82%-66.86%) duties on Chinese imports.

This week, the giant CATL’s Hong Kong shares surged 20%, hitting a new high since listing.

Next week, the focus remains on the war situation and oil prices. The strategy remains balanced: both tech assets and high-oil-price beneficiaries should be allocated evenly.

After all, high oil prices are a double-edged sword—they suppress some overvalued tech sectors while reactivating the investment value of “physical assets.” The market is shifting from chasing “growth narratives” to embracing “hard realities,” with heavy-asset, low-disruption sectors like energy, resources, and utilities undergoing systemic valuation reassessment.

For investors, understanding and aligning with this “return to reality” asset pricing logic is especially important amid the “consumption war” expectations.

What other major events are worth watching next week?

1. GTC Conference: Huang Renxun’s Three New Cards

At 2 am on March 17 Beijing time, Huang Renxun’s keynote will unveil three cards: first, the Feynman chip architecture roadmap based on TSMC’s 1.6nm process, representing Nvidia’s push at the chip frontier; second, the Rubin Ultra high-power GPU, with about 3.3 times the computing power of the current GB300, capable of reducing training time for trillion-parameter models from 3 months to 2 weeks; third, the first quantum switch CPO solution, doubling bandwidth and reducing power consumption by 30%-50%, with 2026 designated as the “Silicon Photonics Commercialization Year.”

Historical data shows Nvidia’s stock has an 80% probability of rising during GTC, with the linkage effect on the A-share computing chain most evident within three trading days before and after the event.

2. Private Equity Credit: Risks More Hidden Than in 2008

The private credit market’s total size is about $2 trillion, provided by private funds rather than banks. Due to lack of public market pricing, risks are hard to detect timely. Three triggers are currently igniting: first, deteriorating asset quality, with high oil prices raising costs and sustained high interest rates weakening SME debt repayment capacity; second, concentrated fraud risks, with recent cases of multiple pledges and inflated asset values; third, accelerated AI disruption, damaging software service firms—core borrowers for private credit.

3. US-China Trade Negotiations Progress

Impact on Chinese assets: If GTC exceeds expectations, the tech chain may get a sentiment boost; but if the private credit crisis in the US triggers a US stock correction, A-shares may not be immune. For RMB exchange rate: if GTC lifts US tech stocks, the dollar may stay strong short-term; but if the crisis sparks risk aversion, gold and US Treasuries could strengthen.