Recent escalation in Middle East geopolitical tensions has driven international oil prices significantly higher, leading to a strong rally in A-share oil and gas sectors. The "Big Three" Chinese oil giants collectively hit their daily price limits, while oil and gas ETFs experienced rapid expansion in scale. Gong Lili, Deputy General Manager of ETF and Innovative Investment at Invesco Great Wall Fund, stated that from a medium- to long-term perspective, the logic for rising resource prices is gradually solidifying, with the oil and gas sector enjoying dual support from both fundamentals and valuations. Investors looking to position themselves in the oil and gas sector may consider the Oil and Gas ETF (Ticker: 159588), which tracks the China Securities Oil and Gas Index, along with its feeder funds (Class A: 021822; Class C: 021823).
The recent surge in the oil and gas sector is primarily driven by geopolitical risk premiums following the escalation of tensions involving Iran. Airstrikes by the United States and Israel against Iran have raised concerns about the expansion of regional conflicts. The Strait of Hormuz, a critical passage for approximately one-third of the world's seaborne crude oil, is under close watch for its navigational stability. Expectations of potential supply disruptions have directly pushed oil prices higher. Wind data shows that WTI crude oil surged over 8% intraday, while Brent crude rose nearly 9%, both reaching multi-month highs, highlighting the strong impact of geopolitical conflicts on energy prices.
Looking beyond short-term event-driven fluctuations, Gong Lili analyzed that the resource sector, including non-ferrous metals, chemicals, oil, and coal, exhibits clear long-term trends. Among these, the oil and gas sector is supported by solid fundamentals over the medium to long term. First, the approaching Fed interest rate cut cycle is expected to lower asset pricing discount rates, benefiting commodity valuation recovery. Second, domestic policies aimed at curbing internal competition, combined with geopolitical risks constraining resource supply, help contain downside risks for commodity prices. Third, China's steady economic recovery, with the Producer Price Index (PPI) stabilizing and rebounding since June 2025, underscores the profit resilience of cyclical sectors. Fourth, the sector offers attractive valuations and dividends. According to Wind data, as of the end of February 2026, the China Securities Oil and Gas Index had a trailing P/E ratio of 15.61, a P/B ratio of 1.54, and a dividend yield of 3.44%, which is higher than long-term government bond yields, highlighting its investment appeal.
Simultaneously, Gong Lili pointed out that short-term sentiment and capital inflows have already driven substantial gains in the oil and gas sector, with some individual stocks accelerating their rise. The current rapid rotation among industry sectors reflects significant market divergence regarding future directions. Coupled with the approaching "Two Sessions" and a rapid rebound in the U.S. dollar index, risk appetite and liquidity may face temporary pressure, warranting attention to potential short-term correction risks.
Among the various indices tracked by oil and gas ETFs in the market, the main ones include the China Securities Oil and Gas Index, the Oil and Gas Industry Index, the Oil and Gas Resources Index, and the S&P Oil & Gas Exploration & Production Select Industry Index. The S&P index is a QDII-based index primarily investing in U.S.-listed companies, while the other three are A-share indices. The China Securities Oil and Gas Index, due to its methodology capping single constituent weight at 15%, exhibits higher concentration and stronger sector representation. Its sector allocation overweight utilities and underweight transportation.
Wind data shows that as of March 2, 2026, the combined weight of the "Big Three" oil giants in the top ten holdings of the China Securities Oil and Gas Index reached 37.15%, significantly higher than the Oil and Gas Industry Index (25.71%) and the Oil and Gas Resources Index (25.01%), highlighting a more pronounced leading effect. In terms of long-term performance, the China Securities Oil and Gas Index gained 118.30% over the past five years, outperforming the Oil and Gas Industry Index (108.08%) and the Oil and Gas Resources Index (102.74%). Regarding dividend yield, the China Securities Oil and Gas Index offered 3.15%, also higher than the Oil and Gas Industry Index (2.82%) and the Oil and Gas Resources Index (3.90%), underscoring its long-term allocation value.
With its high concentration in leading companies and attractive dividend returns, the China Securities Oil and Gas Index provides investors with an efficient tool for allocating to the A-share oil and gas sector. As a core instrument tracking this index, the Oil and Gas ETF (159588) closely mirrors index performance, offering one-stop exposure to key players across the entire industrial chain, including exploration and development, equipment services, and gas transmission. Wind data indicates that as of March 3, the ETF's net asset value reached 2.618 billion yuan, with outstanding shares at 1.628 billion, both setting new records since its inception. Off-exchange investors can consider its feeder funds (Class A: 021822; Class C: 021823).
A golden cross signal has formed in the MACD indicator, indicating positive momentum for these stocks.
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