International oil prices surged significantly last week, reaching their highest levels since October 2023, driven by escalating Middle East conflicts that have nearly halted commercial traffic through the Strait of Hormuz. On Friday, international crude futures closed sharply higher. The WTI April contract rose 12.21% to $90.9 per barrel, posting a weekly gain of 35.6%. The Brent May contract increased 8.52% to $92.69 per barrel, accumulating a 27.88% weekly rise. These represent the largest weekly gains for U.S. crude and Brent since records began in 1983 and 1991, respectively.
The near-blockade of the Strait of Hormuz is triggering a chain reaction of production cuts among Middle Eastern oil producers, placing severe pressure on global energy supplies. Abu Dhabi National Oil Company (Adnoc) and Kuwait Petroleum have successively announced output reductions. Kuwait Petroleum declared on the 7th that due to threats to shipping safety in the Strait of Hormuz from conflict and a shortage of vessels for transporting crude and refined products, it is facing "force majeure" and has begun cutting crude production and refinery throughput. The company has not disclosed specific reduction volumes but stated the cuts are precautionary and will be assessed based on the evolving situation, with readiness to restore capacity when conditions permit. Kuwait is OPEC's fifth-largest producer, with January output averaging approximately 2.6 million barrels per day.
In a statement, Adnoc also indicated it is "managing offshore production levels in response to storage needs" but provided no further details. Ongoing conflict has persistently disrupted oil shipments from the Middle East, with major producers like Iraq and Qatar having previously announced output reductions. Analysts anticipate that as storage capacity in the region becomes increasingly strained, other key producers such as the UAE and Saudi Arabia may also be forced to cut production. JPMorgan estimates that if restrictions on the strategically vital Strait of Hormuz continue, Middle Eastern crude output reductions could exceed 4 million barrels per day by next weekend.
Amid Iranian threats against vessels, shipowners concerned for tanker safety have halted transit through the critical Strait of Hormuz. Furthermore, reports indicate that Danish shipping giant Maersk and German carrier Hapag-Lloyd announced suspensions of several key Middle Eastern routes due to heightened security risks from escalating regional conflict.
Wall Street firm Goldman Sachs stated in a recent report that without signs of normalized traffic flow through the Strait of Hormuz in the coming days, it would promptly revise its oil price forecasts. The bank warned that upside risks to oil prices are "expanding rapidly," suggesting prices could breach $100 per barrel next week if no resolution emerges. Should low traffic volumes persist throughout March, prices could surpass historical peaks seen in 2008 and 2022. Oil previously reached an all-time high of $147 per barrel in 2008.
Qatar's Energy Minister, Saad Al-Kaabi, suggested the conflict could lead Gulf energy exporters to halt all regional oil shipments within days, with some traders already anticipating even higher price levels. If tankers remain unable to transit the Strait of Hormuz, crude prices could surge to $150 per barrel within weeks.
Analysis suggests persistent conflict will directly elevate global oil prices, while a prolonged Iranian blockade of the Strait of Hormuz would increase transportation costs for crude and petrochemicals. The evolution of the Iran situation is expected to significantly influence global petrochemical trends, potentially reshaping supply and demand dynamics for energy and chemical products.
In this context, three investment themes are highlighted: 1) Continued optimism for the oil and gas sector, particularly the long-term value of upstream exploration, oilfield services, and shipping; 2) Monitoring the reshaping of supply-demand balances for chemical products amid geopolitical tensions; 3) Evaluating alternative routes to oil-based production, such as coal chemical sectors.
Related concept stocks: CNOOC (00883): A recent research report maintained a positive outlook, adjusting profit forecasts while raising price targets for both its A-shares and H-shares, citing geopolitical risk premiums and potential supply disruptions. PETROCHINA (00857): The company reported results for the third quarter of 2025, showing a slight revenue increase but a minor decline in net profit attributable to shareholders. The group is actively adapting to market changes, strengthening exploration efforts, and advancing its new energy businesses.
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