On March 9, the market displayed a divergent pattern of "weak indices but strong sectors." While the Shanghai Composite, Shenzhen Component, and ChiNext indices collectively trended lower, the oil & gas and chemical sectors bucked the trend, emerging as the day's most prominent themes. Significant capital concentration highlighted the hedging value and earnings resilience of the energy sector amid ongoing geopolitical conflicts.
The core driver behind the collective surge in these two sectors stems from a sharp spike in international oil prices. Persistent escalation of conflicts in the Middle East has nearly blocked the Strait of Hormuz, a critical chokepoint handling 20% of global seaborne crude oil traffic, causing shipments to plunge by over 90%. Tankers are forced to reroute via the Cape of Good Hope, leading to a surge in freight costs. Simultaneously, major Middle Eastern producers like Iraq and Kuwait have been compelled to significantly cut production due to export halts. Market estimates suggest a global crude supply deficit of 7 to 11 million barrels per day. Coupled with OPEC+ maintaining production cuts, international oil prices have experienced a substantial rally. Latest data shows WTI crude futures briefly surpassing $110 per barrel, with intraday gains exceeding 22%. Brent crude futures, another key benchmark, also touched $110 per barrel, rising nearly 20% during the session.
Within the oil & gas sector, leading companies benefited directly from the oil price surge. CNOOC, with a low breakeven cost of around $28 per barrel, sees its net profit increase by over 10 billion yuan for every $10 rise in oil prices, demonstrating superior earnings elasticity. Its shares rose more than 7%, hitting a record high of 44.54 yuan intraday. PetroChina and Sinopec also advanced, with the trio leading sector sentiment. Companies like Guanghui Energy and Zhongman Petroleum also reached new periodic highs.
In the chemical sector, coal-based chemical companies highlighted their profit resilience due to cost advantages amid soaring oil prices. Industry leader Baofeng Energy saw its shares hit the daily limit-up intraday. Firms such as Jinniu Chemical, HuLu Group, and Luxi Chemical also posted gains, benefiting from soaring methanol prices and integrated supply chain strengths.
From an earnings perspective, this rally is not merely speculative but supported by solid fundamentals. Upstream oil & gas producers directly benefit from higher prices, with leaders like CNOOC and PetroChina enjoying low costs, suggesting sustained revenue and profit growth from elevated oil prices. Oilfield service companies are poised to benefit from increased capital expenditure by energy firms, expecting improved orders and earnings. In the chemical sector, leaders in coal chemicals, agrochemicals, and chlor-alkali segments, possessing advantages like high self-sufficiency in raw materials or benefiting from product price increases and demand growth, have clear earnings growth prospects.
According to disclosed 2025 annual report forecasts, Taishan Oil pre-announced a full-year net profit attributable to shareholders of approximately 130 million to 165 million yuan, a projected increase of 30.88% to 66.11% year-on-year, driven by cost-cutting and efficiency measures.
In the chemical sector, Huipo New Materials reported the most impressive forecasted growth. Significant sales growth of epoxy resins for wind turbine blades in 2025 drove profit increases. Buoyed by strong demand from the wind power industry and expansion into overseas markets, sales rose markedly compared to 2024. Revenue from new composite materials and electronic insulation epoxy resins also improved, leading to a projected surge in net profit of 672.68% to 834.7% year-on-year.
Similarly, Limin Group expects its 2025 net profit to be between 465 million and 500 million yuan, an increase of 471.55% to 514.57% year-on-year, primarily due to higher sales volumes and prices for main products, improved margins, and increased investment income from associates.
Industry insiders suggest that in the short term, ongoing Middle East conflicts and developments regarding Strait of Hormuz navigation and international oil prices will be key variables affecting the oil, gas, and chemical sectors. Further escalation could maintain high oil prices, potentially prolonging the sector's strength. However, risks include geopolitical de-escalation, falling oil prices, regulatory cooling measures, and cost pressures on mid-and-downstream segments. Long-term, sector performance will gradually realign with fundamentals. Upstream oil & gas leaders under energy security strategies and chemical segment leaders with cost advantages and high barriers are expected to continue attracting capital, achieving both valuation and earnings growth.