Middle East Conflict Stirs Oil Prices, Which Assets Benefit?

Sharp fluctuations in oil prices are accelerating transmission to the energy, chemical, and agricultural markets, leading to a phased restructuring of the global industrial chain.

Text | “Finance” Reporter Huang Huiling Intern Zhou Zhou

Editors | Guo Nan, Lu Ling

The significant swings in international oil prices triggered by the Iran conflict are affecting global capital markets.

After previous peaks and declines, on March 12, international oil prices rebounded again, with Brent crude briefly exceeding $100 per barrel at midday. As of the time of writing, it was at $98 per barrel, WTI crude at $92 per barrel, with intraday gains of over 5%. Market concerns over oil supply disruptions have once again dominated pricing.

The A-share market was also affected, with all three major indices adjusting collectively on March 12. By the close, the Shanghai Composite fell 0.1% to 4,129.10 points; the Shenzhen Component dropped 0.63%; the ChiNext declined 0.96%; the STAR Market 50 fell 1.24%; the Beijing Stock Exchange 50 decreased 1.12%, with only the Dividend Index rising 2.08%. A total of 1,494 stocks rose, while 3,893 declined.

In sectors, oil and natural gas, coal, and chemicals led the gains, with funds flowing into risk-averse, counter-cyclical sectors; previously strong sectors like communication equipment, semiconductors, and electrical grids generally retreated, showing clear risk-averse and high-low switching characteristics.

In terms of listed funds, Jiashi Oil LOF (160723) and Coal ETF (515220) rose over 5%. Dingyue LOF (167002), Dacheng Engineering Machinery ETF (159542), and Shenwan Electronics LOF (163116) saw the largest declines.

Currently, international oil prices have become a core narrative in the global financial markets. Liu Gang, Managing Director of China International Capital Corporation and Chief Overseas and Hong Kong Stock Strategy Analyst, told “Finance” that if oil prices are only “rising and falling quickly,” the impact on China is manageable; if prices fluctuate at high levels, long-term effects on downstream profit margins and exports could be more significant. He estimates that if the oil price center rises to $100 per barrel, it would correspond to an additional $120 billion in import costs. “Considering that listed companies are relatively higher quality and that service companies less directly affected by oil prices make up a larger proportion, the profit impact on Chinese listed companies should be less than macro estimates.”

The sharp fluctuations in oil prices are accelerating transmission to energy, chemical, and agricultural markets, prompting a phased restructuring of the global industrial chain. Industry insiders analyze that, amid macroeconomic turbulence, anti-globalization and geopolitical frictions may boost a super cycle in commodities; according to historical commodity rotation patterns, chemicals and agricultural products are expected to become the next main price increase themes.

How will the energy sector perform amid the volatility of international oil prices?

Affected by the Middle East conflict, recent international oil prices have experienced significant volatility—“rising sharply, plunging, then rebounding.” On March 9, U.S. President Trump said that U.S. military actions against Iran might end soon; on the same day, G7 finance ministers stated they are prepared to take all necessary measures to ensure global energy supply, including releasing strategic petroleum reserves. Early on March 10, Iran’s Islamic Revolutionary Guard Corps responded firmly, stating that “the end of the war is decided by Iran.”

This led to Brent crude approaching $120 per barrel on March 9, before plunging sharply, with prices dropping to as low as $81 per barrel on March 10.

From March 11 to 12, the situation escalated further: the International Energy Agency (IEA) announced a joint release of 400 million barrels of strategic reserves by 32 countries, with G7 countries coordinating accordingly; Iran’s armed forces spokesperson announced abandoning “tit-for-tat” retaliation in favor of a series of strikes, and early on March 12, launched the “Real Commitment 4” round 40 military operations, targeting Israel and U.S. military bases in the Middle East; the risk of shipping through the Strait of Hormuz sharply increased, with multiple ships attacked. As a result, oil prices surged back to $100 per barrel.

The surge in oil prices caused by geopolitical conflicts has broadly impacted the oil and gas industry chain and alternative sectors.

Liu Yu from Huaxi Securities states that, due to geopolitical disturbances, OPEC+ has been forced to cut production, leading to rising international oil and natural gas prices, boosting profits for domestic oil and gas exploration companies. Meanwhile, the oil services industry (drilling, exploration, equipment maintenance) benefits from increased capital expenditure by oil and gas companies, with demand expected to continue warming.

CICC research reports that the valuation of oil and gas companies depends on medium- and long-term oil prices. The recent escalation is raising expectations for long-term oil and gas prices: oil fields and facilities in Iran and Saudi Arabia have been targeted, facing long repair cycles; Kuwait and the UAE may gradually start reducing production due to saturated storage, with reactivation taking months; the risk of direct conflict between Gulf countries and Iran, along with investment risks, could increase barrel costs.

Under high oil prices, the investment value of coal chemical sectors has attracted market attention. According to Open Source Securities analyst Zhu Haibin, the breakeven point for coal-to-oil projects is about $55–65 per barrel of Brent crude, and for coal-based olefins about $50 per barrel. When oil prices exceed these levels, coal chemical projects can be profitable.

“The coal chemical industry benefits from the widening price and cost gap of finished products,” said Ren Fei, Deputy Director of Equity Research at China Europe Fund, to “Finance.” “Given China’s resource endowment of abundant coal but scarce oil, domestic coal chemical companies have a natural cost advantage at the raw material end. Coupled with recent lower thermal coal prices due to a warm winter, the cost advantage in segments like coal-based olefins and methanol will further expand, widening profit margins. Leading companies’ ROE is expected to see substantial recovery.”

Additionally, due to the high risk premium, global oil tanker fleets are adjusting routes, affecting not only Middle Eastern shipping but also causing freight rate fluctuations across the global shipping market, becoming a new supply chain disturbance.

Looking ahead, a research report from Great Wall Securities states that in the short term, oil prices are dominated by geopolitical risks; in the medium to long term, if conflicts end, prices may decline but will likely remain above pre-conflict levels. Rising oil prices will increase transportation and logistics costs, especially impacting the airline and shipping industries.

Continued Transmission of Oil Price Increases, Agricultural Products Set for Price Hikes?

Historical data shows a strong positive correlation between key agricultural products like corn and soybeans and oil prices.

“China relies heavily on imports of key feed ingredients like soybeans and corn. Rising shipping costs add to import costs, driving up domestic feed raw material prices. Meanwhile, rising oil prices increase energy costs in processing soybean meal, rapeseed meal, and other protein feed ingredients, pushing up their prices. Companies with self-sufficient feed raw materials and cost control advantages will benefit first,” Liu Yu said.

After the sharp drop in oil prices on March 10, futures contracts for soybeans, soybean meal, and corn fell by 0.54%, 2.33%, and 1.33%, respectively. Related funds also declined, with soybean meal ETF (159985) down 2.33%, though its premium rate remained above 6%. On March 12, as oil prices rebounded, futures for soybeans, soybean meal, and palm oil rose simultaneously.

What is the future trend for agricultural prices? Guotai Junan Futures indicates that soybean meal remains relatively strong in the short term. With crude oil prices surging, Middle East tensions spilling over, and soybean meal valuations being low, there is no significant negative change in fundamentals, so prices are expected to catch up.

Dai Qing from Changjiang Securities suggests that if the U.S.-Iran conflict and the Strait of Hormuz blockade last longer, keeping oil prices high, the supply shocks caused by the conflict could spread from crude oil to chemicals and further to the entire agricultural chain. This could lead to structural price increases in soybeans, corn, and oils, potentially boosting related sectors in A-shares and Hong Kong stocks.

CITIC Futures reminds that until there are clear signals of war ending, markets will trade “conflict premiums,” and the price center may rise; once the war ends, prices of oils and fats may face systemic decline. However, under long-term support from low inventories and weather factors, a shift to a relatively strong oscillation pattern is expected.

The recent large fluctuations in international crude oil prices have also caused sectoral adjustments in A-shares, including non-ferrous metals. Recently, gold prices have experienced volatile movements—since the outbreak of the U.S.-Israel-Iran conflict, London gold once broke through $5,300 per ounce but then fell below $5,100. As of March 12, gold and silver prices declined slightly, with London gold around $5,183 and London silver around $87.

Amid ongoing conflicts, gold remains a traditional safe-haven asset with price support. However, rising oil prices boost inflation expectations, leading to a retreat in Fed rate cut expectations, strengthening the dollar and exerting downward pressure on gold, resulting in recent oscillations.

Looking ahead, Huaxi Securities believes that with ongoing geopolitical conflicts and a sluggish U.S. economy, combined with central bank gold purchases, gold remains a long-term strategic asset. CICC notes that energy inflation risks could introduce uncertainty into Fed monetary policy paths, putting some pressure on gold’s cyclical investment demand. Continued attention to geopolitical developments and oil price potential is necessary.

“Ordinary investors can consider gold as a long-term strategic asset, not just a short-term hedge. Overall, gold prices are likely to continue rising through 2026,” said Ren Fei. “We are bidding farewell to the past 20-30 years of globalized growth. In this environment, gold, as a tested asset class, will become increasingly valuable.”

“Regardless of inflation mode, the typical rotation order is precious metals > base metals > energy > chemicals > agricultural products. Metal prices have already risen significantly. Under the influence of the U.S.-Israel-Iran conflict, oil prices have started to rise. The next likely wave could be in chemicals and agricultural products. From an equity market perspective, focus on related sub-sectors and companies in A-shares and Hong Kong stocks,” Dai Qing said.

A senior investment advisor from a leading firm analyzed: “The Middle East situation remains the main market driver. When oil prices and the dollar rise, risk assets are under pressure; when they fall, risk assets rally. Currently, market fluctuations are driven by news from the U.S.-Iran side. Investors are advised to ignore short-term noise, focus on medium- and long-term trends, and gradually accumulate positions during these oscillations.”