The stock of Cosco Shipping Energy Transportation Co.,Ltd. (HKEX: 01138) surged more than 20% at the market open. As of the time of writing, the share price is up 18.48%, currently trading at HK$16.86 with a turnover of HK$433 million.

A recent research report from Guotai Junan Securities noted that expectations for an agreement between the U.S. and Iran have increased again, which is expected to involve arrangements for Strait shipping. Industry insiders are optimistic about the restocking demand and freight rate performance expected after the Strait reopens. Tanker capacity utilization is projected to return to high levels, and when combined with production increases for restocking and inventory controls, this could lead to a period of unexpectedly strong market conditions. The report also highlights that the longer the Strait remains obstructed, the longer the restocking phase may last.

The report further pointed out that the dividend yield for Cosco Shipping Energy has exceeded 5%, which is expected to support the lower bound of its valuation.