By Kwanwoo Jun
Asian energy stocks rose alongside higher oil prices amid fears of possible oil-supply disruptions at the strategically important Strait of Hormuz after the U.S. military intervention in the Israel-Iran conflict.
The narrow strait, which connects the Persian Gulf to the Indian Ocean, is a crucial waterway that handles roughly one-fifth of the world's oil trade. A closure or any disruption in supply could send oil prices soaring.
"Tight supply and demand--due to possible disruptions in transporting crude oil and refined oil products--could provide domestic refineries with opportunities to increase refining margins and generate gains in inventory valuation," Yujin Jeon, a Seoul-based analyst with iM Securities, said in a research note Monday.
Shares of liquefied-petroleum-gas supplier SK Gas jumped as much as 11% in early trading Monday, leading gains by South Korean energy stocks. Local oil refiners SK Innovation and S-Oil rose as much as 9.0% and 7.0%, respectively. They have since pared gains but continue to outperform the benchmark Kospi, which declined 0.5% following the weekend developments in the Middle East.
Energy stocks in other Asian markets were broadly higher. Hong Kong-listed shares of Cnooc and Sinopec trimmed early gains and were up 0.8% and 0.25% respectively, at midday. PetroChina fell 0.15% after opening higher. Inpex and Japan Petroleum Exploration were each about 1.5% higher in Tokyo afternoon trading.
The gains came as petroleum futures rose sharply following U.S. airstrikes on Iranian nuclear facilities over the weekend and Tehran's vow of retaliation.
Iran's Parliament has voted to block the Strait of Hormuz. Reports, however, indicate that the final decision lies in the country's Supreme National Security Council.
Oil climbed on Monday, with front-month West Texas Intermediate crude oil futures rising 1.9% to $75.22 a barrel and front-month Brent crude oil futures increasing 1.9% to $78.46 a barrel.
If Iran disrupts shipping through the Hormuz Strait, Brent could reach at least $100 a barrel, said Commonwealth Bank of Australia analyst Vivek Dhar.
CIMB Securities analyst Nurzulaikha Azali said that escalating Middle East tensions could push Brent crude prices to $85 a barrel, though a potential closure of the strait may drive prices above $100 a barrel.
Other analysts, including Phillip Nova's Priyanka Sachdeva, cautioned that damage to oil supplies needs to be evident for prices to keep marching higher. There is still a lot of uncertainty in the oil market, she said.
Write to Kwanwoo Jun at kwanwoo.jun@wsj.com
(END) Dow Jones Newswires
June 23, 2025 00:48 ET (04:48 GMT)
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