Oil prices are caught in a fierce battle between geopolitical risks and supply-demand fundamentals, while the high premium risk of domestic crude oil funds has once again triggered alarms.
A sudden escalation of the Iran conflict sent massive waves through the global crude oil market, leading to a surge of capital into the petroleum sector in the A-share market, with China's three major oil companies all hitting the daily limit-up.
At the market open on March 2, ICE Brent crude futures gapped up nearly 13% before quickly paring some of those gains. Unlike the overseas market's pattern of surging then retreating, A-share oil and gas sector stocks and related funds saw strong performance. The oil and gas exploration sector rose over 8% by the midday break. PetroChina (601857.SH), CNOOC (600938.SH), and Sinopec (600028.SH) successively hit the limit-up. Twelve listed oil-related funds also rose by the 10% limit, with premiums continuing to climb, reflecting high market enthusiasm.
By the close, the Shanghai Composite Index was up 0.47% at 4,182.59 points, while the Shenzhen Component Index fell 0.2% and the ChiNext Index declined 0.49. Over 4,200 stocks fell across the market. Oil and gas stocks surged across the board, with nearly twenty constituent stocks hitting the limit-up. Precious metals, chemicals, port and shipping, and coal sectors were relatively active. Among listed funds, twelve funds hit the limit-up, eleven of which were oil and gas funds, and one was the SDIC Silver LOF.
Since February 2026, international crude oil prices have shown an accelerating upward trend, and recent tensions between the US and Iran have further boosted geopolitical risk premiums.
According to a Xinhua News Agency report, the Iranian Islamic Revolutionary Guard Corps announced on the evening of February 28 that it would prohibit any vessel from passing through the Strait of Hormuz. The Tasnim News Agency reported that with the halt of traffic for tankers and other vessels transiting the Strait of Hormuz, the strait had effectively been closed. The Strait of Hormuz is the only sea passage from the Persian Gulf to the Indian Ocean, handling approximately 20% of global seaborne crude oil trade.
International crude oil futures prices spiked rapidly before retreating somewhat. Wind data showed that after the market open on March 2, WTI crude oil reached a high of $75.33 per barrel before fluctuating lower.
The strength in international oil prices was directly transmitted to related domestic assets. In the A-share market, the oil and gas sector experienced a wave of limit-up gains, with the large-cap stocks PetroChina, CNOOC, and Sinopec historically all hitting the limit-up together. On the fund side, Wind data showed that on February 24, Southern Crude Oil LOF and E Fund Crude Oil LOF hit the limit-up. After the open on March 2, crude oil funds surged again, with E Fund Crude Oil LOF, Southern Crude Oil LOF, and the S&P Oil & Gas ETF all rising over 8% in the morning session. By the close, as many as twenty listed funds had gained over 9%, with twelve funds hitting the limit-up.
Geopolitical events are the key driver of short-term changes. CICC analysis suggests that in the short term, sectors like petroleum and petrochemicals, defense military, and non-ferrous metals often see relative or even absolute returns, benefiting from rising risk premiums and supply expectation disruptions. However, historical experience shows that such outperformance is usually阶段性. As the emotional impact fades and supply expectations are revised, sector performance typically reverts to the fundamental主线, with limited long-term impact from geopolitical conflicts on China's industry trends.
Due to significant premium phenomena in the secondary market for crude oil funds, several fund companies have intensively issued risk warning announcements. On February 24, E Fund Crude Oil LOF, Southern Crude Oil LOF, and Harvest Crude Oil LOF all issued premium risk warnings, stating that their secondary market trading prices were significantly higher than their net asset values, indicating large premiums, and alerting investors to the associated risks.
After the alarm was raised, the secondary market trading prices of related funds retreated somewhat. Wind data calculated based on midday closing prices on March 2 showed that the premium rates for Huaan S&P Oil, Southern Crude Oil, and E Fund Crude Oil all exceeded 26%. Crude oil funds under Harvest, Fullgoal, and others also showed premiums of varying degrees.
Currently, Southern Crude Oil LOF remains in a state of suspended subscriptions and systematic investment plans. Its announcement stated that this measure aims to ensure the stable operation of the fund and protect the interests of fund shareholders. E Fund Crude Oil LOF has completely suspended subscription and regular定额 investment services. This means investors can currently only participate through场内 trading. If investors chase the rally by buying in at this point, they face the dual risks of rapidly converging premiums and price corrections once market sentiment cools or the geopolitical situation eases.
Regarding the violent fluctuations in oil prices and their subsequent trajectory, industry institutions generally believe that the current market has departed from pure supply-demand logic and entered a phase of high volatility dominated by geopolitics.
Synthesizing various viewpoints, the market is engaged in intense博弈围绕 short-term geopolitical shocks and medium-to-long-term supply-demand patterns. In the short term, geopolitical risks dominate sentiment, and oil prices and related funds may continue to experience strong volatility. However, in the medium to long term, fundamental pressures from supply surplus, policy adjustments by OPEC+, and high premium risks are all key risk points that investors need to monitor closely.
Several institutions believe the evolution of the Iran-Israel conflict is the core variable for the current market. A Guojin Securities research report suggests that the crude oil market has shifted to being driven by geopolitical risks, and prices are expected to maintain high volatility within the next month. Until the US-Iran situation becomes clearer, oil prices are in a state where they are "easier to rise than fall." CITIC Futures also believes that although the baseline expectation from fundamentals remains a supply surplus, potential disruptions to supply expectations from geopolitical factors are extremely frequent. The signal for the end of this rebound will primarily depend on whether concerns about Iranian supply are disproven or if OPEC+ unexpectedly increases production.
Although geopolitical risks provide support for oil prices, pressures from the supply-demand层面 have not disappeared. Guotai Junan analysis indicates that global supply growth overall exceeds demand, with non-OPEC+ countries (such as the US and Brazil) remaining the main contributors to supply growth. The market is entering a rebalancing cycle, but caution is warranted against rapid oil price corrections triggered by geopolitical de-escalation. Everbright Securities believes that the uncertainty from geopolitical conflicts provides a foundation for oil price strength. Simultaneously, considering the high marginal cost of US shale oil (around $65 per barrel) and OPEC+'s willingness to support prices, oil prices in 2026 are highly likely to operate at medium-to-high levels.
On a more macro level, some institutions see an inflection point in the industry cycle. Wanjia Fund manager Ye Yong proposed that the global crude oil capital expenditure downturn cycle has reached a critical juncture. Coupled with the structural decline of shale oil and reduced supply elasticity, the global market lacks sufficient buffers to cope with various upward shocks. With intensifying global geopolitical conflicts and a potential bottoming and recovery in macro demand, 2026 is highly likely to be a major inflection point year for crude oil prices in the medium to long term.
