The Middle East "Energy War" Continues to Escalate, Oil, Gas, and Chemical Assets Surge Across the Board

The global petrochemical supply chain is under pressure due to escalating Middle Eastern geopolitical conflicts, uncertain prospects for the reopening of the Strait of Hormuz, and successive attacks on key petrochemical facilities, leading to soaring prices for crude oil and chemical products. Market concerns are growing that supply disruptions could push oil prices higher for the long term and reshape the global chemical industry landscape.

The global petrochemical supply chain has suffered another blow, with the outlook for reopening the Strait of Hormuz remaining uncertain, and oil and chemical assets experiencing another surge in trading limits.

On April 7, the A-share petrochemical sector led the gains. By the close, the Wind Petrochemical Index surged over 5%, with stocks in specific chemical segments rising even more sharply. Dongyue Silicon Materials (300821.SZ) and Jiangtian Chemical (300927.SZ) hit the 20% daily limit, while Hengyi Petrochemical (000703.SZ), Xinghua Shares (002109.SZ), and about 20 other stocks also reached the limit. In ETFs, the Chemical Industry ETF E Fund (516570), Huabao Chemical ETF (516020), and Tianhong Chemical ETF (159133) all rose over 3%.

According to Xinhua News Agency, early on April 7, Iran cited unnamed sources claiming that explosions occurred at the Jubail Industrial Zone in northeastern Saudi Arabia, involving U.S. capital, and described it as a widespread strike.

As a result, oil prices spiked during trading, with WTI crude futures reaching a high of $116.50 per barrel. At the time of writing, it was trading at $115 per barrel. Domestic commodity futures prices also rose, with chemical products leading gains: ethylene glycol up 10.99%, methanol up 8.69%, and the European line of the container shipping index up 2.73%.

Huatai Futures believes that the situation in the Middle East remains highly uncertain. The prospect of reopening the Strait of Hormuz remains distant and unclear. Middle Eastern crude oil supplies to Asia have already been interrupted. In the short term, the market is balancing through inventory consumption, sanctions, and refinery capacity reductions, but the refined oil market lacks supply redundancy and is already in a demand destruction phase. If the Strait remains blocked, physical crude prices could break through $200 per barrel, and refined oil prices might exceed $300 per barrel.

Middle Eastern Petrochemical Facilities Under Attack

The Middle East conflict has escalated again. The attack on the Jubail Industrial Zone, one of the world’s most important petrochemical production bases with an annual output of about 60 million tons, accounts for 6% to 8% of global production.

The zone hosts several large petrochemical companies and projects, including SABIC, one of the largest investors, the Sadara project involving U.S. Dow Chemical, and a joint venture between Saudi Aramco and France’s Total Energies.

Previously, Xinhua reported that on April 6, the Israeli Defense Forces issued a statement claiming they carried out airstrikes on a large petrochemical complex in the southern Asaluyeh region of Iran, the largest of its kind in Iran. The statement said the IDF had targeted two major Iranian petrochemical complexes, severely damaging over 85% of Iran’s petrochemical export capacity.

According to incomplete statistics from First Financial, since the outbreak of the U.S.-Israel-Iran conflict on February 28, systematic strikes have repeatedly hit petrochemical facilities across the Middle East, posing a severe challenge to the global energy supply chain.

Earlier, on April 4, the U.S. and Israel launched a large-scale airstrike on an Iranian petrochemical hub. According to CCTV News, they targeted the Mahshahr Petrochemical Economic Zone, with all active industrial units evacuated.

Beyond energy products, disruptions to natural gas supplies are also significant. On March 18, CCTV News reported that the Israeli Defense Forces attacked Iran’s largest natural gas facility in Bushehr, which processes 40% of Iran’s natural gas. Iran warned that energy facilities in Saudi Arabia, the UAE, and Qatar had become “legitimate targets” for attack.

Guoxin Securities’ research report pointed out that over 90% of Qatar and the UAE’s liquefied natural gas (LNG) exports pass through the Strait of Hormuz, accounting for 19% of global LNG trade. Both Qatar and Iran’s major natural gas fields have suffered varying degrees of damage, leading to production cuts or halts, and currently, these LNG supplies cannot be rerouted to other markets. Elevated natural gas prices will severely impact Europe’s manufacturing competitiveness.

Severe Disruption to the Global Petrochemical Supply Chain

More critically, the outlook for the Strait of Hormuz remains uncertain.

According to CCTV News, Iran’s Parliament’s National Security Committee has begun reviewing control plans for the Strait. A spokesperson for the committee said that strategic measures to ensure the safety of the Strait and the Persian Gulf are now on the agenda.

“Multiple Gulf countries’ energy facilities have been attacked over the past month, combined with ongoing disruptions in the Strait of Hormuz, the global chemical supply chain faces both supply contraction and demand destruction,” said a futures analyst to First Financial. “The evolution of the geopolitical situation remains the biggest short-term market variable. We need to closely monitor the progress of maritime navigation restoration and the extent of damage to facilities.”

The analyst also mentioned that even if the Strait reopens, due to the cycle required for oil transportation, the market will need several weeks to rebalance, and the supply chain will take time to recover.

Guoxin Securities analysis states that since late February 2026, when the U.S. and Israel launched military strikes against Iran and Iran closed the Strait of Hormuz, approximately 10 million barrels per day of crude oil have been reduced, representing 10% of global demand. Currently, the global oil supply gap is about 5 million barrels per day. As remaining storage diminishes, Gulf countries are expected to continue reducing output, with a longer recovery cycle extending from weeks to months.

However, the impact of high oil prices is not uniform. CICC’s analysis suggests that countries with diversified energy sources and alternatives (such as China and the U.S.) have natural resilience; companies with strong cost absorption capacity and supply chain resilience can benefit by expanding market share when competitors’ capacities are cleared.

In the domestic market, E Fund analysis indicates that soaring energy prices in Europe, Japan, and other regions are increasing production costs, potentially accelerating the exit of overseas chemical capacities. China’s chemical industry, with diversified raw material sources, mature coal chemical substitution processes, scale advantages, and cost competitiveness, remains the most resilient link in the global supply chain. The exit of overseas capacities is expected to benefit China’s chemical market share and bargaining power in the long term.

Foreign Institutions Expect Oil Prices to Reach $200

The ongoing conflicts keep the Strait unstable, repeatedly pushing oil prices higher.

Since the conflict erupted, WTI crude futures have risen over 64%, reaching nearly $120 per barrel in March. On April 7, Brent and WTI futures traded at high levels of $111 and $115 per barrel, respectively.

Guoxin Securities estimates that April could see further acceleration in international oil prices, with short-term prices possibly exceeding $120 per barrel, and raises their 2026 forecast for Brent and WTI to an average of $80–$90 per barrel.

Foreign institutions are more aggressive in their extreme scenario predictions. Macquarie Group recently forecast that if the Iran conflict persists until June and the Strait remains closed, oil prices could hit a record high of $200 per barrel. They emphasize that the timing of the Strait’s reopening and physical damage to energy infrastructure are key factors determining the long-term impact on commodities.

Citi expects that if supply disruptions continue through the end of June, prices could surge to $200 per barrel, covering full costs, including not only crude oil prices but also the premium on refined products based on consumption weights.

Goldman Sachs believes that during supply disruptions, the market will need to continually increase risk premiums to induce preemptive demand contraction, hedging against shortages in scenarios of prolonged supply interruption. They project that from March to April, Brent crude will average $110 per barrel (up from their previous estimate of $98), representing a 62% increase over their 2025 annual average.

Guangzhou Futures provided specific commodity insights: for ethylene glycol, ongoing Middle Eastern geopolitical tensions support strong prices due to supply contraction, rising costs, and capital market pressures; crude oil and PX remain tight due to reduced long-term supply from Japan and disruptions in Middle Eastern naphtha exports, with many Asian PX plants declaring force majeure; and in the asphalt market, before the situation substantially eases and the Strait reopens, the market is expected to remain structurally firm.

CITIC Construction Investment offers a broader macro risk perspective, noting that Iran’s situation continues to escalate and remains highly volatile, with market sentiment swinging around negotiation signals. The next 2–3 weeks are seen as a high-risk period for sudden deterioration, with the market awaiting bottom-fishing opportunities and short-term cautiousness prevailing.