Oil Surges Above $100 as Iran Strikes Disrupt Hormuz Shipping

Global oil markets were thrown into turmoil over the weekend after several Iranian oil storage facilities were reportedly struck by Israel, further escalating tensions in the Middle East and disrupting shipping through the strategically vital Strait of Hormuz.

As a result, most oil tankers remain unable to pass through the key maritime corridor, sending shockwaves through global energy markets. When trading opened on March 9, international crude prices surged as much as 20%, briefly breaking above $100 per barrel. The sudden spike triggered a sharp decline in Asian equity markets, with major indices in Japan and South Korea opening significantly lower.

Despite the market turmoil, U.S. President Donald Trump stated that oil prices are likely to decline in the short term.

Chinese Oil Stocks Surge on Market Open

In China's A-share market, the three major state-owned oil companies opened sharply higher. Among them, CNOOC Ltd. — whose core business focuses on upstream exploration and production — hit the daily trading limit at the opening bell.

Market participants note that upstream-focused oil companies tend to benefit most directly from rising crude prices.

Oil Price Volatility Likely to Persist

Industry experts believe the conflict could last longer than previously expected, making it difficult to predict when the situation will stabilize. With crude production in some countries already disrupted, oil prices may remain volatile at elevated levels in the short term.

However, analysts emphasize that high oil prices may not persist throughout the year on average, even though current geopolitical risks are driving near-term supply concerns.

For upstream oil companies, the immediate price surge represents a short-term positive catalyst. Analysts expect the impact to gradually be reflected in stock prices during the week, although medium- to long-term valuations will still depend primarily on realized corporate earnings.

Middle East Tensions Drive Oil Market Uncertainty

Analysts say oil price trends are now highly sensitive to developments in Iran. In the near term, the timeline for the conflict remains uncertain. Production cuts in parts of the Middle East have already emerged, increasing the likelihood that crude prices will remain elevated and potentially move even higher.

Oil stocks typically benefit from rising crude prices, though their gains may not fully match oil's surge because equities are also influenced by broader market volatility. Early trading across the Asia-Pacific region showed heavy selling pressure, highlighting investor caution.

Moreover, market pricing ultimately depends on company performance. Even though crude prices are currently high, analysts still expect the annual average price for the year to remain below current peak levels.

Strait of Hormuz Key to Global Supply Balance

According to the chief investment officer of Blue Water Capital Management Limited, the United States and Israel have begun targeting Iran's oil storage and production facilities. Because crude exports represent a major source of fiscal revenue for Iran, any disruption to that income stream could significantly extend the duration of the conflict and deepen U.S. political objectives.

This raises the possibility that the war may last longer than previously anticipated.

The most critical factor affecting oil prices now is when shipping through the Strait of Hormuz will resume. With transport routes still blocked, global crude supply could remain severely constrained for a period of time.

Chinese Oil Majors Positioned to Benefit

For major Chinese oil companies such as PetroChina and CNOOC Ltd., the situation is considered favorable.

These firms generate most of their revenue from crude oil sales, while their production assets have relatively limited exposure to the Middle East. As a result, higher global oil prices can directly boost both revenue and profitability.

Last week, however, their share prices rose only modestly and even experienced temporary pullbacks, lagging behind the sharp increase in oil prices. If the market reaches a consensus that elevated crude prices will persist for an extended period, analysts expect the share prices of these companies to begin reflecting that outlook during the week ahead.