HK Stock Market Move | Oil stocks rose across the board as negotiations between the U.S. and Iran hit an impasse, leading to a surge in international oil prices. Upstream oil and gas companies are enjoying ample profit elasticity.

Oil stocks surged across the board. As of the time of writing, CNOOC (00883) climbed 3.93% to HKD 24.32; PetroChina (00857) rose 3.08% to HKD 9.86; and Sinopec (00386) increased 1.5% to HKD 4.385. On the news front, the prospects for U.S.-Iran negotiations are once again overshadowed. On Monday, WTI crude oil futures surpassed USD 82 per barrel, and Brent crude approached USD 88 per barrel. Trump stated that he has instructed U.S. negotiators to seek compensation from Iran due to its claims for war reparations. Iran, on the other hand, has indicated that it will not negotiate with the U.S. before the end of Trump's term. Moreover, last week, the U.S. Strategic Petroleum Reserve (SPR) decreased by 6.1 million barrels, dropping to 298.7 million barrels. Guosen indicated that the turbulent geopolitical situation in the Middle East, combined with shipping disruptions in the Strait of Hormuz and the Mandeb Strait, as well as the suspension of the Caspian oil pipeline, has significantly reduced global crude oil supply stability. Currently, we are in the summer demand peak season in the Northern Hemisphere, with low inventories amplifying price elasticity. In a high oil price environment, upstream oil and gas companies have ample profit elasticity, and coal-to-olefins and overseas integrated refining enterprises with low-cost advantages significantly benefit.