Geopolitical tensions push up international oil prices; multiple beneficiary sectors in A-shares show strong performance since March

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Under the influence of tense geopolitical situations, since March, international crude oil prices have been strong, with Brent crude futures once approaching $120 per barrel, currently around $105 per barrel. Driven by the surge in oil prices, multiple benefiting sectors have performed strongly: since March, the coal sector has risen over 6%, the chemical coal sector over 22%, and the oil exploration sector nearly 15%.

Industry insiders say that the ongoing escalation of conflicts in the Middle East, the blockage of shipping through the Strait of Hormuz, has caused recent international oil prices to soar, and short-term oil prices may continue to rise. The industries benefiting from rising oil prices can be roughly divided into four categories: sectors directly benefiting from higher oil prices, sectors benefiting from substitution effects, sectors with strong pass-through capabilities, and sectors with inflation-resistant properties.

● Staff Reporter Wu Yuhua

International oil prices soar

Recently, international crude oil prices have shown strong performance. Data shows that as of 17:30 Beijing time on March 20, NYMEX crude oil futures main contract and ICE Brent crude futures main contract were at $95.82 and $105.77 per barrel, respectively, with both increasing over 42% since March. Since March, international oil prices have fluctuated significantly, with NYMEX and ICE Brent futures approaching $120 per barrel at times, with volatility of 74.72% and 59.76%, respectively.

Sui Xiaoying, Chief Petrochemical Researcher at Founder Mid-term Futures, said that the ongoing escalation of conflicts in the Middle East, the blockage of shipping through the Strait of Hormuz, has significantly impacted Middle Eastern crude oil exports. Recently, some Middle Eastern refineries, oil fields, and ports have been attacked, and more facilities face the risk of attack. Market concerns over oil supply have intensified, causing international oil prices to continue soaring.

“Such geopolitical risks in the Middle East have a significant short-term impact on oil prices. If the blockade of the Strait of Hormuz continues, it will force oil fields to shut down, sharply reducing short-term crude oil supply. The mismatch between supply and demand in the near-term crude oil market will deepen, pushing prices higher,” said Xu Pengyan, an energy and chemical analyst at Yinde Futures. The longer the event lasts, the more severe the upstream capacity losses in the Middle East, and the impact on oil prices will shift from short-term shocks to medium- and long-term capacity shortages, keeping prices high for a longer period.

Sui Xiaoying added that the US has temporarily eased sanctions on Russian oil, and the International Energy Agency (IEA) member countries have jointly released 400 million barrels from strategic reserves. However, with most shipping through the Strait of Hormuz still restricted, other measures cannot fully compensate for the oil supply gap for now. Under this background, oil prices are expected to remain strong. Future price movements will depend on the evolution of the Middle East situation. If tensions persist and shipping through the Strait remains blocked, oil prices will have upward momentum. Conversely, if tensions ease or shipping resumes, there is a risk of prices falling from high levels.

He Kang, Chief Strategist at Huatai Securities Research Institute, said that from multiple perspectives, this conflict may be the most widespread, intense, and costly since 1979 in the Middle East, with the most severe physical reductions in oil and energy exports.

“Looking ahead, short-term oil prices may continue to rise,” said Zhang Qiyao, Chief Strategy Analyst at Industrial Securities.

Multiple sectors benefit and strengthen

Since March, as international oil prices have continued to rise, several sectors in the A-share market have responded to varying degrees. These include upstream energy-related industries directly benefiting from high oil prices, such as oil exploration; and energy substitution sectors driven by high oil prices, such as coal and new energy.

Specifically, data shows that as of the close on March 20, since March, the coal sector has risen 6.33%, the chemical coal sector over 22%, and the oil exploration sector nearly 15%. During the same period, the Shanghai Composite Index and Shenzhen Component Index declined 4.94% and 4.34%, respectively. The performance of these sectors significantly outperformed the market. In the coal sector, China Coal Energy rose over 22%, Yankuang Energy, China Shenhua, Shaanxi Coal Industry, and Huaihe Energy all rose over 10%, while Orchid Science & Technology and Shaanxi Black Cat rose over 8%. In the chemical coal sector, Jinniu Chemical rose over 72%, Baofeng Energy over 33%, and Jinye Technology over 11%. In the oil exploration sector, *st Xin Chao rose over 32%, Guanghui Energy over 21%, and China National Offshore Oil Corporation (CNOOC) and China National Petroleum Corporation (CNPC) over 12%.

From a capital perspective, data shows that as of March 19, most stocks in the coal, chemical coal, and oil exploration sectors have seen net capital inflows. For example, Baofeng Energy’s net financing inflow exceeded 3.1 billion yuan, and CNOOC, CNPC, and Guanghui Energy each had net inflows over 300 million yuan. Stocks like Intercontinental Oil & Gas, Shaanxi Black Cat, and Blue Flame Holdings also saw net inflows exceeding 100 million yuan.

He Kang noted that the increased risk of Strait of Hormuz blockage exposes the fragility of the global energy supply chain, with significant upside risks for crude oil and chemical product prices. The four main benefiting sectors from rising oil prices are: first, sectors directly benefiting from oil price increases, mainly oil and natural gas exploration; second, sectors benefiting from substitution effects, such as coal mining, new energy vehicles, and renewable power; third, sectors with strong pass-through capabilities, like oilfield services, cement, chemicals, and personal care products; and fourth, sectors with inflation resistance, such as aquaculture and general retail.

“Since 2010, the industries with the highest correlation to oil prices in absolute and relative returns are mainly in non-ferrous metals, coal, oil and petrochemicals, chemicals, steel, machinery, new energy, and agriculture,” said Zhang Qiyao. The logic of benefiting from rising oil prices can be summarized into three categories: direct profit enhancement—rising oil prices directly increase profits for upstream energy industries like oil extraction, oil services, and shipping; energy substitution—high oil prices make other energy sources like coal, gas, chemical coal, and biofuels more economical, boosting demand; and cost-driven increases—rising crude prices push up production costs for fertilizers and pesticides, which then pass through to higher agricultural product prices.

He Kang added that profitable industries under high oil prices are relatively scarce. “Initially, high oil prices tend to benefit defensive sectors like banking and power, or sectors benefiting from inflation such as petrochemicals, coal, and agrochemicals. After oil prices peak and start to decline, growth-oriented tech sectors tend to perform better.”

Divergence in medium- and long-term oil price expectations

Given the strong short-term performance of oil prices, how should we view the medium- and long-term trends?

“In the short term, if geopolitical conflicts are not effectively alleviated, supply-demand imbalances will continue to worsen, pushing near-term prices higher until downstream demand is forced to decline to restore supply-demand balance, at which point price increases will ease,” said Xu Pengyan. Long-term, if Middle Eastern supply remains interrupted, the market will have to invest in high-cost fields to meet distant demand, raising the marginal cost of oil and elevating the long-term price of crude. Currently, the geopolitical event mainly impacts the near-term oil market.

Sui Xiaoying believes that in the long run, upstream oil and gas investments remain in a low cycle, with supply vulnerable to geopolitical shocks and insufficient buffering capacity. While major global central banks maintain loose monetary policies and some economic indicators improve, supporting economic stabilization and recovery, additional demand will come from strategic reserves replenishment. Under conditions of limited supply elasticity, supply-demand conflicts may intensify. Recent geopolitical conflicts have disrupted the cyclical rise in oil prices. Historically, such conflicts are unsustainable in pushing prices higher; eventually, as tensions ease and other interventions occur, prices will return to a more reasonable range, with rapid declines possible. After the situation stabilizes, oil prices are expected to revert to a range of $80–$90 per barrel.

He Kang stated that ongoing Strait of Hormuz blockades could lead to limited crude storage capacity in some Middle Eastern countries, causing oil field shutdowns and medium-term price increases. Countries may also replenish strategic reserves for energy security. Considering geopolitical risk premiums and shifts in global supply and demand, if oil-producing countries’ capacity remains intact, short-term prices could see significant rises, with Brent crude forecasted to reach $78 per barrel by 2026; if production facilities suffer irreparable damage and infrastructure like desalination plants are impacted, the forecast rises to $95 per barrel.

“Medium-term, oil prices are unlikely to be capped at a certain level for long, but the duration of high prices may be limited due to the difficulty in sustaining expanding conflicts,” Zhang Qiyao said.

Goldman Sachs commodities research team predicts that Brent crude will stay above $100 per barrel in March, then fall back to around $85 in April, gradually declining to a low of around $70 by the end of the year. They also warn that the possibility of prices remaining elevated longer than baseline scenarios should not be ignored.