Oil services stocks advanced against the broader market trend. At the time of writing, PRODUCTIVE TECH (00650) rose 10.91% to HK$0.305. SHANDONG MOLONG (00568) increased 8.74% to HK$4.48. SINOPEC SSC (01033) was up 4.17% to HK$1. CHINA OILFIELD (02883) gained 1.78% to HK$10.31.
Market sentiment was influenced by reports indicating that U.S. President Donald Trump has informed his advisors that he is inclined to authorize an initial strike against Iran in the coming days, followed by a larger-scale military operation in subsequent months. The objective would be to pressure Iran into compliance and reaching an agreement on U.S. terms. This has raised concerns about potential U.S. military action against Iran, which could disrupt oil production and logistics in Iran and the wider Persian Gulf region.
According to an analysis by Oriental Securities, geopolitical conflicts have heightened market worries about reduced oil and gas supplies, contributing to a rebound in oil prices. However, due to the long construction cycles typical of oilfield services projects, client companies often require confirmation of sustained higher oil prices before committing to new projects. While current geopolitical concerns have boosted oil prices and market expectations, a genuine recovery in the oil services sector still depends on concrete developments. The transmission from higher oil prices to improved conditions in the oil services industry is estimated to take at least six months. Furthermore, as downstream companies are likely to prioritize long-term partnerships when selecting suppliers, firms with strong competitive advantages are expected to be the primary beneficiaries of any industry recovery.
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