Huatai Securities: Persistent supply gap in oil may lift medium-term oil price center.

Huatai Securities research report indicates that since the end of February, Iran has restricted transportation through the Strait of Hormuz, leading to a global oil and gas supply gap. On March 17th, the WTI/Brent futures prices closed at $96.3/$107.4 per barrel, an increase of 43.7%/48.2% since the end of February. Taking into account the interruption of transportation in the Strait of Hormuz, the full capacity operation of Saudi and UAE alternative pipelines, potential production capacity increases in North America, and proactive reductions in refining capacity of net crude oil importing countries, Huatai Securities estimates that the global short-term supply gap may reach 200,000 barrels per day. At the same time, the continuous closure of the strait has caused saturation of crude oil storage tanks in some Middle Eastern countries, leading to oil field production shutdowns. Coupled with countries beginning a round of strategic reserves for crude oil, refined oil, and other petrochemical products for energy security considerations, the medium-term oil price center is expected to further increase. Huatai Securities has raised its average Brent price forecast for 2026 to $90 per barrel. They believe that high-dividend energy leading companies with the capability to increase production and reduce costs, as well as incremental natural gas business, may help domestic oil and gas resources become more self-reliant. The resilience of China's petrochemical industry chain is stronger than that of overseas companies in the short term, and after the supply chain stabilizes, global strategic reserves will help the refining and chemical industry continue to recover. It is recommended to invest in leading enterprises with complete industry chains.