Occidental Petroleum Surges 7% Pre-Market, Risk-Off Sentiment Still Dominates Mainstream Trading.

TradingKey - Impacted by ongoing regional conflicts in the Middle East, U.S. stocks Occidental Petroleum (OXY) surged 7% in pre-market trading before paring gains to nearly 6%. Persistent regional conflicts have driven oil prices higher, directly benefiting Occidental Petroleum. This, combined with capital's preference for safe-haven assets, has collectively pushed the stock price up.

Previously, Citigroup (C) raised its short-term Brent crude price forecast to $85 and warned that in an extreme scenario where oil and gas infrastructure is hit, Brent crude could soar to $120.

HSBC noted that if the Strait of Hormuz is closed, approximately 4.6 million barrels per day of OPEC+ spare capacity would be difficult to export, and oil prices would face significant upward pressure. The impact would not be limited to crude oil but would also extend to the refined products market—about 10% of global diesel and 20% of jet fuel are transported through the strait. Tensions have already pushed up middle distillate prices, and if disruptions are prolonged, the risk of temporary shortages will rise.

Several investment banks believe the key is not whether OPEC+ has spare capacity, but whether incremental crude oil can successfully traverse the strait; if transit restrictions persist, the upside potential for oil prices will rapidly open up.

JPMorgan Chase (JPM) estimates that the seven Gulf oil-producing countries have an onshore storage capacity of approximately 343 million barrels, which can support about 22 days of stranded production; combined with approximately 50 million barrels of offshore storage provided by about 60 empty tankers, this can be extended to a maximum of about 25 days. If a blockade exceeds this timeframe, storage will reach saturation, and oil-producing nations may be forced to cut or even halt production. The energy market would then face not only a price shock, but more likely a physical supply disruption.