Trump's mouth, the oil price's leg! Five consecutive years of positive returns, the only one in A-shares.

Why does the market react long-term to the threat of Trump on oil prices?

I initially thought Trump’s speech this morning would ease the situation, but last night’s news turned out to be a smoke screen—closing my eyes, it all became: “In the next two or three weeks, Iran’s energy facilities will be targeted.”

TACO makes it crystal clear.

After this incident, oil prices once again broke the hundred-dollar mark, with Brent crude oil reaching $102.86 per barrel intraday, up 4.06%. On the A-share side, the “Three Oil Companies” all rose, China Merchants Steamship hit the daily limit, and the oil ETF China Merchants (159197) surged over 3% on its debut.

Geopolitical tensions once again pushed oil prices to the forefront. But this time, the market’s reaction is no longer a short-term shock. International oil prices have risen over 70% this year, firmly standing at multi-year highs.

Trump said, “The U.S. doesn’t need Middle Eastern oil.” But the world still does.

The Strait of Hormuz sees about 20 million barrels of crude oil passing daily, accounting for one-third of global maritime transportation. Trump’s threat to strike Iran’s energy facilities means this vital chokepoint could be cut off at any time.

The market isn’t afraid of a shortage of oil; it fears uncertainty. When the “next two or three weeks” window is put on the table, the consensus is clear: short-term supply is at risk.

This is also the underlying logic behind the surge in the oil ETF China Merchants (159197), even higher than the gains of the “Three Oil Companies.”

Therefore, many friends are confused: oil prices have risen, why don’t oil company stocks always follow?

The answer lies in the industry chain. Upstream exploration benefits directly, midstream transportation takes a share, while downstream refining might face cost pressures. Buying a single company could be a misstep if the timing is wrong.

China National Petroleum’s oil and gas equivalent growth is 2.5% by 2025, China CNOOC’s is 6.9%—not because they want to make more money from high oil prices, but because they must produce their own oil. Upstream capital investments continue to increase; shale oil and deep-sea oil, once sidelined due to high costs, have now become hard bones that must be gnawed through.

The China Merchants Oil ETF (159197), tracking the National Oil & Gas Index, does this: it bundles the entire industry chain.

As of March 31, the “Three Oil Companies” account for 39.82% of the weight, with the top ten companies totaling 69.48%. But it’s not just betting on the “Three Oil Companies.” The index covers exploration and development, equipment services, refining sales, and gas transmission and distribution across the full chain.

When oil prices rise, upstream offers elasticity; when prices stabilize, downstream provides cash flow; when shipping is booming, assets like China Merchants Steamship can also contribute.

Thus, from 2021 to 2025, the China Oil & Gas Index has delivered positive returns for five consecutive full years: 33.93%, 0.05%, 7.01%, 10.90%, 10.13%. This is the only such case among similar oil and gas indices.

For a market repeatedly tormented by Trump’s TACO, directly tracking the China Merchants Oil ETF (159197) means no need to guess whether oil prices will go up or down tomorrow, nor to research which oil well has higher yield. A packaged tool covering the entire industry chain, with five years of positive returns and a dividend yield over 3%, is itself the answer.

The more intense the geopolitical winds, the stronger this logic becomes.

Source: Sanhao Financial Worker

Risk reminder: Funds carry risks; investments should be cautious.