Oil prices are experiencing a "roller coaster" trend. What signals should A-share investors pay attention to?

In March, international oil prices have become a key focus for the market.

At the beginning of the month, NYMEX WTI crude oil futures were still hovering around $70 per barrel. In just a few days, prices surged all the way up, at one point breaking through the $100 mark. The intraday high reached $119.48 per barrel. Then the market reversed sharply and fell significantly. Brent crude oil followed suit, showing a volatile pattern of rising then pulling back. As of 11:04 Beijing time on March 25, the main NYMEX WTI crude oil futures contract was down 3.92%, to $88.73 per barrel; the main ICE Brent crude oil futures contract was down 4.61%, to $95.61 per barrel.

With oil prices putting on a “roller-coaster” ride, what investment opportunities are available in the A-share market? What risks should investors watch out for?

What are the key reasons behind the large fluctuations in oil prices?

Sharp swings in oil prices are mainly driven by geopolitical developments. Haitong Securities said that since late February, Iran has implemented restrictions on shipping through the Strait of Hormuz, leading to a global oil and gas supply shortfall. After taking into account factors such as the disruption of shipping capacity through the Strait of Hormuz, Saudi Arabia and the United Arab Emirates operating replacement pipelines at full capacity, potential incremental production capacity in North America, and refinery preventive load reductions in net crude oil importing countries, calculations suggest that in the near term the global market may face a crude oil supply gap of 2 million barrels per day. At the same time, the Strait of Hormuz being continuously blocked has caused some Middle Eastern countries’ crude oil storage tanks to reach capacity and has led to the shutdown of oil fields. On top of that, countries may launch precautionary replenishment of energy chemical products such as crude oil and refined products based on energy security considerations. In the medium term, the oil price mid-point is expected to rise further.

CICC believes that this geopolitical situation has a major impact on the global oil supply side. The shortage risk in the global spot crude oil market continues to worsen, and damage to crude oil production capacity in the Middle East has already formed an impact on medium- to long-term supply elasticity.

Chaos Tientian Futures said that the market is showing a pattern of large-scale volatility with unclear direction. Going forward, only after military action advances or negotiations achieve substantive progress can it be determined whether the conflict will become prolonged or end in the short term.

What will the future trend of oil prices look like? What should you pay attention to?

Caitong Futures said that the sustainability of the core driving logic for oil prices depends on the evolution of the geopolitical situation. Internal scenario analysis shows three possibilities: if the conflict escalates, with Iran continuing to blockade the strait, oil prices may be pressured above $120 per barrel; if both sides remain in a prolonged standoff, oil prices will likely trade in a high-range volatile band of $85—$100 per barrel, with this being the most likely scenario; if the conflict de-escalates quickly, with the Strait of Hormuz fully reopened to navigation, the market will revert to the fundamentals of each product itself, and products that typically rise together may face pullback pressure—oil prices could fall to around $80 per barrel.

Going forward, three variables should be tracked closely: real-time shipping and navigation data for the Strait of Hormuz, the actual effectiveness of the IEA’s coordinated oil release program, and the restart progress of domestic and overseas refining and chemical processing facilities.

In the “roller-coaster” oil price environment, what signals should A-share investors pay attention to? Around what should investment strategies be built?

Guangfa Securities believes that the most worrying phase for the market may already be behind us, but the conditions for a full reversal are still not mature. It is expected that the A-share market will enter a period of consolidation and bottom-building.

For investment execution, it is advisable to follow an “defensive rather than offensive” approach. Focus on three key signs of stabilization: first, continuously track the subsequent evolution of the geopolitical situation and the trend of international oil prices stabilizing; second, observe changes in market trading volume, and whether broad-based index ETFs show signs of a significant volume-led bargain-hunting dip; third, pay attention to how major indices are performing.

In summary, in the short term the market may see repeated volatility within the current range to digest floating positions and wait for clearer fundamental signals. Investors should stay patient at this stage, shifting from a broad-based “general market rally” mindset to cultivating investments in more specific sub-sectors. Under the premise of strictly controlling overall risk, actively seize opportunities for structural investment.

Regarding investment strategy, Citic Securities suggests that the current core holding should prioritize industries where overseas capacity reset costs are high and the difficulty is great, and where supply elasticity is easy to be affected by policy. Focus on new energy, chemicals, power equipment, and non-ferrous metals as the core bottom position. On top of that, it is recommended to further increase allocation to undervalued factor exposures, with particular attention to the insurance, brokerages, and power sectors.

Additionally, the following four lines of clues can be prioritized for structural opportunities corresponding to them:

First, chemicals that have replacement raw materials and alternative process routes. Higher crude oil prices will bring high-margin spread advantages.

Second, products with a high share of Middle East and Western Europe capacity. Supply disruption is expected to create additional supply-demand gaps, thereby forming a price-hike expectation.

Third, products whose prices are driven up by cost pressure from substitutes, and whose demand improvement further expands the supply-demand gap.

Fourth, products that were already moving along a price-increase track, and where cost increases provide a “price-following window,” resulting in tight balance between supply and demand.

What risks should be watched out for?

Haitong Securities said that in the short term, the risk transmission chain of “elevated oil prices—global stagflation—liquidity tightening” still needs to be重点关注, and tail-risk disruptions should not be overlooked either. From the capital perspective, the funding support effect resulting from an expansion in insurance fund allocations is expected to continue.

Huaxin Securities said that it is necessary to重点关注 the disturbance risks caused by overseas geopolitical conflicts. The current overseas geopolitical situation is continuing to escalate. The negative feedback effect after a sharp rise in oil prices is gradually becoming visible. Concerns about stagflation and liquidity tightening are continuing to heat up. Risk assets are under persistent pressure, and gold may show a profit-taking type of sell-off.

A massive amount of information and precise interpretations—available in the Sina Finance app

责任编辑：刘万里 SF014