Geopolitical tensions are restructuring the global oil and gas equipment sector, with potential benefits for Chinese companies in terms of market penetration and international expansion. According to maritime data, approximately 35% of the world's seaborne crude oil exports and over 15% of refined product exports transit the Strait of Hormuz, making the Middle East situation highly impactful on tanker markets. Rising oil prices are accelerating the recovery of the oil and gas cycle. Although EBITA for the world's three largest oilfield services companies continued to decline in the third quarter of 2025, inflection points have emerged in both revenue and order backlogs. Supply disruptions resulting from U.S.-Iran conflicts have steepened the recovery trajectory.

Countries in the Middle East and North Africa are likely to seek diversified sources for oil and gas equipment to reduce reliance on U.S. suppliers, which may objectively enhance the market share and overseas expansion of Chinese enterprises. Key observations include:

Following joint U.S.-Israel airstrikes on Iran on February 28, Iran’s Islamic Revolutionary Guard Corps announced a ban on vessel passage through the Strait of Hormuz. This development has significantly influenced tanker markets. Key impacts are: 1. Major oil-producing nations have cut output, driving oil prices higher. Companies such as Abu Dhabi National Oil Company and Kuwait Petroleum Corporation have announced production reductions. Global Brent crude spot prices rose from $71.10 per barrel on February 27 to $94.35 per barrel by March 6. 2. Tanker freight rates have surged sharply. Maersk announced on March 3 that it would continue suspending transit through the Strait of Hormuz and fully halt voyages via the Bab el-Mandeb Strait and Suez Canal, rerouting vessels around the Cape of Good Hope. As a result, the Time Charter Equivalent index for Chinese imported oil tankers increased from $203,000 per day on February 27 to $469,000 per day by March 6.

In the oilfield services equipment sector: 1. Higher oil prices are accelerating the industry's cyclical recovery. While profitability metrics remain under pressure, key indicators suggest the worst may be over, with geopolitical supply shocks hastening the upturn. 2. Geopolitical realignments are prompting oil-producing nations to diversify equipment procurement, creating opportunities for Chinese suppliers to increase market presence and expand globally. 3. Leading firms are leveraging core technologies to develop new growth areas. Companies such as Jereh and Neway are expanding into power generation, natural gas, nuclear power, and water treatment sectors, supported by expertise in high-temperature, high-pressure equipment validation.

In the shipping sector: 1. In the short term, sharp increases in Time Charter Equivalent rates have significantly shortened shipowners' investment payback periods. Although new vessel prices remained stable, the 131% rise in the Chinese imported tanker index between February 27 and March 6 has improved returns and boosted capital expenditure willingness. 2. Long-term geopolitical conflicts reduce global shipping efficiency, expanding total vessel capacity demand. For instance, rerouting from the Suez Canal to the Cape of Good Hope extends the Europe-China voyage distance from about 10,000 nautical miles to 14,000 nautical miles, increasing transit time by 30–40%. If global trade volumes remain constant, existing vessel capacity may prove insufficient.

Investment recommendations: For oilfield services, recommended stocks include Jereh Group and Neway Valve, with suggestions to monitor companies such as Dwellop, Zhongman Petroleum, Anton Oilfield Services, Offshore Oil Engineering, and CNOOC Energy Technology & Services. In the shipping sector, China State Shipbuilding is recommended, with attention advised on Songfa.

Risk factors include trade disputes, macroeconomic volatility, and intensifying competition.