Author: David, Deep Tide TechFlow

Today, Brent crude oil surpassed 110 dollars, and WTI exceeded 100 dollars.

You should know that the last time oil prices reached 100 was in March 2022, during the Russia-Ukraine war.

This time it's Iran. US and Israeli airstrikes, the assassination of Qassem Soleimani, and the effective closure of the Strait of Hormuz. One-fifth of the world's seaborne oil passes through this route, and the daily passage has dropped from over 100 tankers to single digits.

Image source: TradingView

With oil transport halted and storage tanks full, Iraq, Kuwait, and the UAE began shutting wells and cutting production in succession. Qatar's largest liquefied natural gas export facility has stopped.

US crude oil surged 35% in a week, marking the largest weekly gain since records began in 1983; Qatar's energy minister stated that if this continues, oil prices could hit 150.

For ordinary people, these numbers may seem distant. But tonight at midnight, the domestic refined oil price adjustment window opens. The price of 92 gasoline rises by 0.39 yuan per liter, costing an extra 20 yuan to fill a tank. This is already the fourth consecutive increase this year.

Gas stations are just the first link you feel.

Blocked Tankers in the Middle East, Traffic Jam in Dongguan

300 tankers are blocked in the Strait of Hormuz, while thousands of kilometers away, in Dongguan Zhangmutou, a line of large trucks is stuck.

Oil is not just gasoline. It is the lifeblood of the entire industrial system. Plastics, synthetic fibers, rubber, fertilizers, all are downstream products of oil.

Once the strait is blocked and oil prices rise, it only takes a few days for the impact to reach South China.

According to Southern Finance, over the past week, Dongguan Zhangmutou, the largest distribution center for plastic raw materials in South China, saw a wave of panic buying. Images of "traffic jams in the Dongguan Zhangmutou plastic trading market" can be seen everywhere online.

This market, with an annual trading scale of nearly 100 billion, saw buyers rushing in to grab goods due to fears of price increases, with large trucks queuing for raw materials, clogging nearby roads. The largest plastic e-commerce platform temporarily crashed, and the 90,000 square meters of public storage approached full capacity, with workers working overtime for several days to clear space.

Image source: Southern Finance

At the same time, the on-site rules of the plastic market have changed: prices are only valid for the day, payment before shipment, no pre-booking. A new price every hour.

How significant is the increase?

PC, used for making mobile phone cases and car lamps, rose from last year's low of 10,000 yuan per ton to 14,000 yuan per ton, a 40% increase in a week; one of the world's largest chemical companies, BASF, announced a price increase for plastic additives, up to 20%.

Upstream petrochemical companies have closed their offers and limited sales. Downstream factories are reluctant to accept this price, but are even more afraid of what tomorrow might bring.

In fact, the reasoning is not complex:

When oil rises, chemical raw materials follow, plastic pellets rise, and eventually, the prices reach your mobile phone case, the running shoes beneath your feet, and the water bottle on your table. From the oil well to the shelf, this chain is much shorter than most people think. Gas stations are just the first link you notice, but certainly not the last.

The last time we experienced such a surge was during the Russia-Ukraine war in 2022.

That year, oil prices also broke 100, and prices rose throughout the year, with global stock markets falling from the beginning to the end of the year. Many people still remember that 92 gasoline hit 9 yuan per liter.

Some fill up, while others increase their positions

Tonight at midnight, the domestic refined oil price adjustment window opens. The price of 92 gasoline is expected to increase by 0.39 yuan per liter, and 95 gasoline by 0.41 yuan per liter. Filling up a 50-liter tank of 92 costs an extra 20 yuan. This is the fourth consecutive increase this year.

When you go to the gas station tomorrow morning, you will pay more. But today, some people are already counting money.

On March 2nd and 3rd, China National Petroleum, Sinopec, and CNOOC collectively reached two consecutive price limits for the first time in history. Among 48 oil and gas concept stocks, 28 were limit up, and the entire sector was a sea of red.

China National Petroleum's market value broke 2.4 trillion, regaining the top spot in A-share market value.

In fact, the three major oil companies have quietly risen for three years. China National Petroleum rose 210% from early 2023 to now, and CNOOC increased by 232%.

But the increase in these three years was slow and quiet, and most people did not notice at all. The generation of retail investors that was trapped when China National Petroleum was listed at 48 yuan in 2007 endured for nearly twenty years, and in these three years of slow increase, they have gradually clawed back.

The war's impact has kicked a slow-moving process into a powder keg.

The chemical sector follows the same script.

Funds began to flow in last year, with the scale of chemical ETFs expanding from 2.5 billion to 25.7 billion, a tenfold increase. After the war broke out, the pace accelerated sharply, with a net inflow of 31.3 billion in five trading days, and chemical ETFs saw net purchases of over 300 million in a single day.

On the oil and gas ETF front, over 8 billion in funds have poured in this year, and multiple fund companies have concentrated on applying for new oil and gas-themed products.

A slow burn lasted a year, but with the war coming, it turned into a mad dash.

Taking a step downstream, the financial markets are actually thinking the same thing as the Zhangmutou plastic market. On March 3rd, plastic futures main contracts surged 6%, and PP polypropylene hit a daily limit.

Futures are rising, spot prices are also rising, traders are hoarding, and some investors are beginning to quietly position in plastic-related stocks.

Thus, some hoard plastic raw materials for price differences, some buy plastic futures for volatility, and some focus on chemical stocks and buy ETFs... Every link in this entire chain has someone placing bets.

The people who have profited from the three oil companies' rise over the past three years may be focusing on the long-term changes in China's energy structure, slowly earning with certainty. Those who rush in after the war are betting on something entirely different, such as the conflict not ending too soon and betting that oil prices can rise further.

Panic and speculation often make the same moves. The same barrel of oil is a cost to you, but a profit to others. The difference lies in where you stand in the chain.

The ones filling up hope for a quick end, while those increasing their positions hope for a slower resolution.

New Opportunities Aren't in the Old Straits

Looking back at history, every round of oil price crises reshapes the distribution of interests along the industrial chain.

2022 is a typical case. After oil prices broke 100, the most direct beneficiaries were upstream oil companies, just like today. But the true structural winners emerged in a field that few were paying attention to at that time:

New energy vehicles.

92 gasoline prices at 9 yuan directly increased the operating costs of fuel vehicles, prompting a large number of consumers to reassess the economic accounts of gasoline cars versus electric cars.

New energy vehicle penetration was already on the rise, supported by policy subsidies, technological advancements, and charging infrastructure, but the high oil prices of 2022 served as a more direct push, turning observers into buyers.

The current situation is actually somewhat similar.

Oil prices have once again broken 100, and the inflow of funds into oil and chemicals is the most instinctive reaction. But if we extend the timeline to two or three years, what is truly worth paying attention to may not be who made money in this round of oil prices, but which alternative demands this shock will accelerate.

For the past thirty years, the operation of the global manufacturing and trade system has been based on several implicit premises: such as energy supply being abundant, shipping lanes being safe, and supply chains being highly globalized...

The situation in the Strait of Hormuz may have arisen due to war, but the geographical dependencies have not changed. All participants related to energy are being forced to reassess their risk exposures.

Behind every recalculated account lies a new business opportunity. Alternative energy, alternative materials, alternative shipping routes, localized supply chains... “Not relying on oil” is becoming an increasingly significant industry in itself.

Will oil prices fall back? I believe there is a high probability they will. Iran itself relies on 90% of its oil exports passing through the strait, and if it stays closed too long, it will starve itself.

But every spike leaves behind things that won’t fall back with oil prices. Accounts calculated won’t be forgotten, and reconstructed supply chains won’t be dismantled.

Oil prices breaking 100 changes not just your fuel costs. It will also change the way everyone calculates their expenses.