Summary
[Everbright Securities: The escalation of the Russian-Ukrainian conflict pushes up the prices of crude oil and agrochemical products and is optimistic about the prosperity of the petrochemical and fertilizer industries]On February 24 local time, Russian President Vladimir Putin delivered a speech and decided to conduct a special military operation in the Donbas region. After the upgrade, the intraday price of Brent crude oil futures broke through the $100/barrel mark, hitting a new high since September 2014, after which oil prices fell. The continued recovery of global crude oil demand, the decline of OPEC’s effective spare capacity and the lack of global oil and gas capital expenditures still limit the recovery of short-term crude oil supply. The follow-up development of the recent Russia-Ukraine conflict has a greater impact on the short-term oil price trend. Russia is a major exporter of oil and gas, and Europe is highly dependent on Russia’s energy supply. The escalation of the conflict between Russia and Ukraine may exacerbate the tension of crude oil supply in the short term. The growth rate of capital expenditure plans of overseas oil companies in the medium and long term is relatively low. To sum up, the market is becoming more and more sensitive to geopolitical risks. As a basic energy source, an important chemical raw material, and an important strategic reserve, the value of crude oil is bound to rise again, and the petrochemical industry will continue to be optimistic.
Russia-Ukraine conflict escalatesoil priceRecord high, continue to be optimistic about the prosperity of the petrochemical industry
On February 24, local time, Russian President Vladimir Putin delivered a speech and decided to conduct a special military operation in the Donbas region. The conflict between Russia and Ukraine further escalated. The intraday price of Brent crude oil futures broke through the $100/barrel mark, the highest since September 2014. New highs, after oil prices fell. The continued recovery of global crude oil demand, the decline of OPEC’s effective spare capacity and the lack of global oil and gas capital expenditures still limit the recovery of short-term crude oil supply. The follow-up development of the recent Russia-Ukraine conflict has a greater impact on the short-term oil price trend. Russia is a major exporter of oil and gas, and Europe is highly dependent on Russia’s energy supply. The escalation of the conflict between Russia and Ukraine may exacerbate the tension of crude oil supply in the short term. The growth rate of capital expenditure plans of overseas oil companies in the medium and long term is relatively low. To sum up, the market is becoming more and more sensitive to geopolitical risks. As a basic energy source, an important chemical raw material, and an important strategic reserve, the value of crude oil is bound to rise again, and the petrochemical industry will continue to be optimistic.
The conflict between Russia and Ukraine affects the global supply of agrochemical products, and higher product prices benefit domestic fertilizer companies
Russia and Ukraine are the world‘s largest trading countries of wheat, corn and sunflower oil, and Ukraine ranks first in Europe in terms of arable land, and is known as the “granary of Europe”. Due to the escalation of the situation in Russia and Ukraine, there are obvious uncertainties in the planting and production of local grain companies in Ukraine.At the same time, as the United States, the United Kingdom, the European Union, etc. have expressed that they will impose sanctions on Russia, Russia will follow up withagricultural productsThe pressure on commodity exports represented by this will increase significantly, which will further push up international food prices. In addition, Russia is also one of the three largest exporters of chemical fertilizers in the world and occupies an important position in the international fertilizer supply chain. Russia is the world’s largest exporter of nitrogen fertilizers, the second largest exporter of potash fertilizers, and the third largest exporter of phosphate fertilizers. Similarly, as European and American countries impose sanctions on Russia, there will be a significant shortage of global fertilizer supply, which will raise global fertilizer prices, which may be beneficial to domestic fertilizer companies.
Risk Analysis:The risk of oil prices falling rapidly and staying high; the risk of downstream demand being less than expected.
(Article Source:Everbright SecuritiesResearch)