Guosen Securities released a research report stating that the continued blockade of the Strait of Hormuz and the expanding scale of involuntary production cuts among Gulf nations, which are expected to have a long recovery cycle, are key factors. There is a high probability of international oil prices accelerating their rise further in April, with short-term prices potentially exceeding $120 per barrel. The firm also raised its 2026 average price forecasts for Brent and WTI crude to the $80-$90 per barrel range. The upstream oil and gas extraction sector is expected to maintain high prosperity.
Amid the ongoing geopolitical situation, continued attention should be paid to price and cost changes for chemical products such as methanol, acetic acid, olefins and other coal chemical products, MDI, methionine & vitamins, PVC, and potash fertilizers. The main views of Guosen Securities are as follows:
Following a joint U.S.-Israel military strike on Iran at the end of February 2026, Iran subsequently closed the Strait of Hormuz, a critical global energy chokepoint. In 2025, an average of 20 million barrels of crude oil and petroleum products were transported daily through the strait, accounting for approximately 25% of global petroleum trade. Alternative overland crude oil transport routes have relatively smaller capacity. Oil transported via pipeline from Saudi Arabia, loaded at the Yanbu port, cannot pass through the Suez Canal and must exit the Red Sea eastward through the Bab el-Mandeb strait. According to reports, the Houthi group recently indicated it is considering military attacks or blockade actions in the Bab el-Mandeb strait in support of Iran.
After the Strait of Hormuz blockade, empty oil tankers cannot enter ports for loading, forcing produced oil into storage tanks. Due to limited storage capacity, this has directly led to production cuts at oil fields. According to incomplete statistics, total crude oil production cuts in the Middle East amount to approximately 10 million barrels per day, accounting for 10% of global demand. As remaining storage capacity dwindles and refineries shut down, the scale of production cuts in Gulf countries is expected to continue expanding. With prolonged involuntary cuts, the recovery cycle is expected to stretch from weeks to months. According to estimates, the current global crude oil supply gap is around 5 million barrels per day. Short-term oil prices still face upside risks, while the medium-term price center has clearly elevated.
The closure of the Strait of Hormuz will also significantly impact global natural gas trade. Approximately 93% of Qatar's and 96% of the UAE's liquefied natural gas (LNG) exports pass through the strait, accounting for 19% of global LNG trade. Furthermore, key gas fields in Qatar and Iran have suffered varying degrees of damage, leading to production cuts or even shutdowns. Currently, there is no viable alternative route to transport this LNG to other markets. As natural gas is a crucial energy source for Europe, prices for European-sourced chemical products are expected to rise, potentially forcing production cuts. High natural gas prices will severely impact the competitiveness of European manufacturing.
The ongoing U.S.-Israel attack on Iran and the continued Strait of Hormuz blockade are affecting 13-15 million barrels per day of petroleum product trade from the Gulf region. The blockade persists, and future developments regarding Strait passage require close monitoring. Involuntary production cuts among Gulf nations continue to expand, with a lengthy recovery cycle anticipated for the Middle East. International oil prices are highly likely to continue accelerating their rise in April, with short-term prices potentially exceeding $120 per barrel. The 2026 average price forecasts for Brent and WTI crude have been raised to $80-$90 per barrel. The upstream oil and gas extraction sector is expected to maintain high prosperity. Key recommendations include CNOOC, PetroChina, and China Oilfield Services.
For coal chemical products like methanol, acetic acid, and olefins, international oil prices have surged significantly while coal prices have remained relatively stable, leading to a widening oil-coal price spread. As of March 27, 2026, the average cost for coal-based and oil-based olefins was 6,801/10,700 yuan per ton, respectively, with the cost advantage for coal-based olefins expanding to 3,899 yuan per ton, significantly highlighted under high oil prices. Affected by Middle East geopolitical conflicts, methanol prices rose over 40% month-on-month in March, directly pushing up acetic acid production costs, where domestic coal-based acetic acid production routes hold a clear advantage. Key recommendations include Baofeng Energy and Hualu Hengsheng, along with related acetic acid listed companies.
Regarding MDI: Total European MDI capacity in 2025 was approximately 2.5 million tons per year, accounting for about 20% of global capacity. Due to rising raw material prices at the end of 2025, BASF, Wanhua Chemical, and Huntsman successively implemented price increases for South Asia, Southeast Asia, Europe, and the Middle East/Africa, ranging from $200 to $350 per ton. Furthermore, the 400,000-ton MDI and TDI plant of Saudi Arabia's Sadara was shut down on March 31. This facility is the largest production plant in the Middle East, holding over 90% market share in the region, increasing upside risks for MDI prices. If European and Asia-Pacific natural gas prices continue to rise, the competitiveness of MDI plants in Europe, Japan, and South Korea will be significantly impacted, and uncertainties regarding stable operations will increase substantially. Therefore, MDI prices are on an upward trend in the medium term. Key recommendation: Wanhua Chemical.
For Methionine & Vitamins: Combined European methionine capacity is 480,000 tons, accounting for approximately 20% of global nominal capacity. Its production relies on raw materials such as methanol, natural gas, propylene, and sulfur. Against the backdrop of sharply rising raw material and European natural gas prices, the competitiveness of European methionine plants is significantly impaired, while the cost advantage of domestic Chinese methionine producers is strengthened. The sharp rise in energy and chemical feedstock prices also impacts the stability of the vitamin supply chain, leading to significant monthly increases in Vitamin E and Vitamin A prices. Key recommendation: Zhejiang NHU.
For PVC: Rising crude oil prices have increased the production cost of ethylene-based PVC. Simultaneously, production cuts at some overseas PVC plants have reduced supply, pushing up export prices. Calcium carbide-based PVC plants, benefiting from relatively stable production costs and raw material supply, have seen operating rates continue to rise. As the PVC price center shifts upward, the profitability of calcium carbide-based PVC has been continuously improving. Focus on Hubei Yihua and related integrated coal-calcium carbide-PVC companies.
For Potash Fertilizer: The global potash industry is oligopolistic with prominent resource scarcity. Medium to long-term supply-demand dynamics continue to optimize. Furthermore, potash demand is expected to benefit from growing biofuel demand under high oil prices, suggesting a moderate upward trend in product prices. Domestically, there is a supply-demand gap for potash fertilizer, with high reliance on imports. Key recommendation: Asia-Potash International. The company holds potassium salt mining rights covering 263.3 square kilometers in Khammouane Province, Laos, with estimated reserves equivalent to approximately 1 billion tons of KCl, and is fully entering a period of KCl capacity commissioning, indicating broad long-term growth potential.
Recommended stocks include: PetroChina (601857.SH), a leading domestic integrated energy company with a strong position in the natural gas industry chain; CNOOC (600938.SH), an excellently managed offshore oil and gas giant; Wanhua Chemical (600309.SH), a global leader in new chemical materials and a polyurethane industry giant; Asia-Potash International (000893.SZ), a domestic producer of scarce potash fertilizer with expanding capacity highlighting economies of scale; Zhejiang NHU (002001.SZ), a leading comprehensive fine chemicals company with significant technological and industrial synergies; Baofeng Energy (600989.SH), a domestic leader in coal-to-olefins, with significant advantages under high oil prices.
Risks include fluctuations in raw material prices, fluctuations in product prices, and weaker-than-expected downstream demand.
Comments