According to analysis, from a long-term cyclical perspective, periods of economic downturn often coincide with slowing economic growth and intensified geopolitical competition. During such phases, oil, natural gas, and coal, as irreplaceable strategic physical assets, not only exhibit resilience against inflation but also demonstrate characteristics of wide fluctuations or upward price trends that significantly outperform general financial assets in a stagflation environment. The investment rationale for energy companies has shifted towards dividend assets characterized by "free cash flow + high dividends + sustained share buybacks." The increased probability of conflict has systematically raised the risk premium for energy assets. From the perspective of national energy security, close attention should be paid to the development of energy self-sufficiency and control in the Xinjiang region.
Key views are outlined as follows:
Crude Oil: Continued U.S.-Israel-Iran Conflict Drives Sustained Oil Price Increases This week, with the continued closure of the Strait of Hormuz, the global crude oil market has experienced a sharp supply reduction and preemptive downstream production cuts, compelling the International Energy Agency (IEA) to initiate a large-scale release of strategic petroleum reserves. On the supply side, the Strait of Hormuz directly impacts the output of several Middle Eastern countries. Last week, Saudi Arabia, Iraq, the UAE, and Kuwait collectively reduced their daily production by up to 6.7 million barrels per day. On the demand side, a significant portion of oil and gas resources passing through the Strait of Hormuz are destined for Asia. This week, refineries in East Asia began reducing operational rates, with several refineries in South Korea (including Lotte and LG), Malaysia, Singapore, and other Southeast Asian countries also lowering their processing loads. Against this backdrop, the IEA released 400 million barrels from strategic reserves to stabilize supply. The Strait of Hormuz is a critical artery for global oil and gas resources. The continuation of the U.S.-Israel-Iran conflict is expected to sustain the upward trajectory of oil prices.
Xinjiang Coal Chemical Sector: Energy Security and Cost Advantages Herald a Potential Golden Era From a national strategic standpoint, Xinjiang benefits from two major shifts: the transition from a coastal economy to the Belt and Road Initiative has repositioned Xinjiang from a peripheral region to a strategic gateway, granting it significant geopolitical advantages. The balance between energy security and dual-carbon environmental goals is tilting, leading to a resurgence of the coal chemical industry. Xinjiang, leveraging its resource advantages, is becoming a focal point for energy security. From Xinjiang's own perspective, promoting stability through development has become a primary theme. Historically, Xinjiang has balanced development and stability, and it is currently in an important strategic period for high-quality development. The development of Xinjiang's coal chemical sector shares similarities with the U.S. shale gas boom, requiring long-term national investment in foundational technologies and infrastructure to ultimately overcome external energy dependency.
Natural Gas: Russian Defense Ministry Accuses Ukraine of Attacking "TurkStream" Pipeline Facilities The Russian Defense Ministry stated that in the early hours of the 12th, Ukraine used fixed-wing drones to attack a gas compressor station in the Krasnodar Krai in southwestern Russia. Russian air defense forces reportedly shot down 10 drones, and the compressor station facilities sustained no damage. PJSC Gazprom confirmed the report, stating that two compressor stations supplying the "TurkStream" and "Blue Stream" natural gas pipelines were attacked again, but all attacks were thwarted. Russian authorities accused Ukraine of attempting to cut off natural gas supplies to European consumers through these attacks.
Risk warnings include the potential for significant fluctuations in international oil prices, slower-than-expected recovery in downstream demand, and risks associated with overcapacity and policy adjustments.
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