Chinese Oil & Gas Stocks Rise Amid Middle East Conflict

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Shares of China’s major energy companies surged as escalating conflicts in the Middle East pushed crude oil prices close to a four-year high, reflecting strong investor interest in the country’s three leading state oil firms.

In Shanghai today, China National Offshore Oil Corporation’s stock rose 7.1%, closing at CNY43.36 (USD6.27) per share, after earlier hitting the daily trading limit of 10%. PetroChina increased by 5%, reaching CNY12.92 (USD1.87), while Sinopec gained 1.7%, ending the day at CNY7 (USD1).

Since the beginning of the month, CNOOC’s shares have climbed 21%, with PetroChina and Sinopec rising by 19% and 8%, respectively.

Crude oil futures also surged significantly, with both West Texas Intermediate (WTI) and Brent crude jumping nearly 30%, reaching around USD120 per barrel — their highest levels since July 2022. By 4 p.m. Beijing time, WTI had pulled back to USD102.83, and Brent crude was trading at USD107.62 per barrel.

This price spike is linked to military strikes on Iran by the U.S. and Israel that started late last month, effectively disrupting shipping through the Strait of Hormuz, the vital maritime passage between the Persian Gulf and Indian Ocean.

Additionally, oil producers in the Middle East, including the United Arab Emirates and Kuwait, announced production cuts, further fueling the return of higher global oil prices.

In the near term, the trajectory of oil prices will depend heavily on whether shipments through the Strait of Hormuz resume. Ongoing disruptions could compel more output cuts from key Middle Eastern producers, raising the danger of a global supply shortage.

Analysts predict that the price movements could mirror those seen early in the Russia-Ukraine conflict in 2022. If the strait’s disruptions are resolved within two weeks, Brent crude is expected to trade between USD70 and USD80 per barrel, according to a recent report. However, if the interruptions persist into the second quarter, prices could surpass USD120 per barrel.