China Galaxy Securities released a research report stating that oil prices saw a significant increase in March. Due to disruptions in the Strait of Hormuz, Gulf countries were forced to cut oil production, while some overseas refineries announced force majeure reductions in operations. The current crude oil market remains focused on the evolving geopolitical situation in the Middle East. It is projected that Brent crude prices will fluctuate widely around $100 per barrel in April 2026, with short-term volatility expected to intensify due to geopolitical uncertainties. The report advises close monitoring of U.S.-Iran negotiations, traffic conditions in the Strait of Hormuz, and the operational status of oil production facilities in the Gulf region. For alternative energy routes, attention should be given to oil and gas, coal chemical, and light hydrocarbon chemical industries. Key points from China Galaxy Securities are as follows:
Oil prices rose significantly in March, with average prices for Brent and WTI reaching $99.6 and $91.0 per barrel, respectively, marking month-on-month increases of 43.6% and 41.1%. On the supply side, according to the IEA's March report, near-total disruption of shipping through the Strait of Hormuz and saturated storage facilities have compelled Gulf countries to reduce oil production by at least 10 million barrels per day. Meanwhile, the 32 member countries of the International Energy Agency unanimously agreed to release 400 million barrels of strategic petroleum reserves, which have already begun entering the market. On the demand side, over 60% of Asia's seaborne naphtha imports originate from the Middle East. Some overseas refineries, including KPIC, YNCC, and LG Chem, have declared force majeure output reductions, while operational rates at certain Chinese refineries have also declined. In contrast, U.S. refinery utilization rates are gradually increasing, reaching 92.9% as of March 20, a 1.5 percentage point rise from the previous period. Following seasonal patterns, further increases are anticipated. Regarding inventories, U.S. commercial crude oil stocks stood at 461.64 million barrels as of March 27, an increase of 22.36 million barrels from the end of February. The crude oil market continues to focus on Middle Eastern geopolitical developments, with short-term Brent prices expected to fluctuate widely around $100 per barrel. Close attention should be paid to U.S.-Iran talks, Strait of Hormuz transit conditions, and the operational status of Gulf oil production facilities.
China's apparent crude oil demand remained strong in January-February, rising 12.6% year-on-year. Crude processing volume reached 123 million tons, up 2.9% year-on-year, while domestic crude output was 36 million tons, increasing 1.9%. Crude imports totaled 97 million tons, surging 15.8% year-on-year. Apparent crude consumption reached 132 million tons, growing 12.6%, with external dependency standing at 73.2%, remaining high.
Apparent natural gas demand in China saw a slight increase of 0.8% year-on-year in January-February. Domestic natural gas output was 44.6 billion cubic meters, up 3.1%, while imports fell 1.1% to 27.6 billion cubic meters. Apparent consumption reached 70.7 billion cubic meters, rising 0.8%, with external dependency narrowing slightly to 39.1% year-on-year.
China's apparent refined oil product demand showed steady growth of 5.4% year-on-year in January-February. Refined product output was 68 million tons, increasing 2.6%, while exports rose 12.7% to 8 million tons. Apparent consumption reached 69 million tons, up 5.4%, with gasoline, kerosene, and diesel consumption growing 0.8%, 2.1%, and 4.0%, respectively. The increase in gasoline and kerosene consumption may be linked to heightened private car travel and rising air passenger traffic during the winter vacation and Spring Festival holidays. Stable diesel demand is likely supported by consistent logistics needs and preliminary agricultural fuel requirements.
Recommended investment targets include companies in oil and gas, coal chemical, and light hydrocarbon chemical sectors, such as PetroChina (601857.SH), Baofeng Energy (600989.SH), and Satellite Chemical (002648.SZ).
Risks to consider include intensifying international trade friction, potential disruptions in key raw material supply, weaker-than-expected downstream demand, and delays in project commissioning.
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