--- title: "EJFQ Analysis 丨 Oil prices stabilize after a decline, \"Three Oil Giants\" buy on dips" type: "News" locale: "en" url: "https://longbridge.com/en/news/292540184.md" description: "Oil prices have stabilized after experiencing significant fluctuations due to geopolitical conflicts, with Brent crude nearing $80. Although the situation between the U.S. and Iran had previously driven up oil prices, the easing of hostilities and historical patterns indicating that event-driven volatility is often quickly priced in suggest that oil prices are expected to return to calm. The petrochemical sector has benefited from this, with the stock prices of the \"three major oil companies\" experiencing slight increases" datetime: "2026-07-13T23:25:52.000Z" locales: - [zh-CN](https://longbridge.com/zh-CN/news/292540184.md) - [en](https://longbridge.com/en/news/292540184.md) - [zh-HK](https://longbridge.com/zh-HK/news/292540184.md) --- # EJFQ Analysis 丨 Oil prices stabilize after a decline, "Three Oil Giants" buy on dips The Hang Seng Index hovered at a high level yesterday, with buying support every time it dipped to 24,000 points, closing at 24,213 points, up 38 points. Semiconductor-related stocks showed no signs of improvement, while oil prices rebounded after a drop, stimulating the petrochemical sector to outperform among the 25 classified industries in the EJFQ system, with the "three major oil companies" gaining between 0.7% and 2.4%. At the end of February, the United States, along with Israel, attacked Iran, resulting in the death of Iran's Supreme Leader Ayatollah Khamenei. His funeral concluded last week, and the conflict between the two countries has clearly escalated, causing international oil prices to surge sharply. Brent crude oil continued to rise during the Asian session yesterday, approaching $80 per barrel, up more than 10% from the lows at the beginning of the month. After the outbreak of war between the U.S. and Iran, Brent crude soared to $126.41 per barrel. However, as geopolitical tensions eased and the two countries had the opportunity to cease hostilities, prices fell nearly 20% in both May and June, hitting a low of $70.14 on July 1, representing a maximum drop of 44.5% (with a closing calculation showing a drop of about 40%). The market fell into a technical bear market, with almost all gains from the conflict evaporating. Currently, it is testing the "bull-bear boundary" at the 200-day moving average, and regardless of whether it can break through, oil prices are expected to return to a period of calm. Similar situations have occurred twice in the past six years. As shown in the attached \[chart\], during the second quarter of 2020, the COVID-19 pandemic led to a rapid slowdown in the global economy and expectations of declining energy demand, causing Brent crude to drop by more than 70% (with New York futures even unprecedentedly falling to negative values). Benefiting from the easing of pandemic concerns, oil prices recovered their losses in about six months, and volatility returned to its starting point. In February 2022, Russia invaded Ukraine, causing Brent crude to spike immediately, but a few months later, it returned to "old ground." This was followed by soaring inflation, aggressive interest rate hikes by central banks (especially the U.S. Federal Reserve), a bear market hitting the stock market, and the bursting of the real estate bubble in China, leading to a decline in overall oil demand. Oil prices fell more than 40% before hitting bottom, and volatility had already narrowed. Looking at the last two rounds of event-driven shocks, it can be observed that oil prices tend to price in the worst impacts in a very short time, meaning investors generally overestimate their severity, leading to a rapid increase in volatility that returns to the original point within a few months. The current U.S.-Iran conflict is similar, and earlier analyses predicting that oil prices would stabilize above $100 per barrel as a new norm may be at risk of failing. As for the short-term outlook, it still depends on the geopolitical situation, but the mere news of a blockade in the Strait of Hormuz may not be sufficient to drive oil prices to surge again, but it will more effectively reflect actual supply and demand. Of course, while "war premiums" may not dominate the oil market in the medium term, under the two major trends of countries replenishing previously consumed inventories and deploying "energy independence," oil prices are expected to remain strong in the long term. The volatility of oil prices has shifted from wide to narrow over the past few months, bringing investment opportunities to sector stocks. Before and after the Middle East conflict, Sinopec (00386), PetroChina (00857), and CNOOC (00883) all surged to over five-year highs. However, as oil prices significantly retreated over the past few months, they rebounded in July in line with the broader market, completing the journey from expensive to cheap in terms of valuation Due to the low likelihood of a sharp decline in the oil market, the opportunity to bottom-fish may have been missed. However, with the "three major oil companies" offering a dividend yield of over 5.5 cents, they still hold value for medium to long-term holding. 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