Recently, I noticed an interesting phenomenon—whenever tensions in the Middle East escalate, the market starts speculating on oil price hikes and related stocks, but the real profit-makers are often investors who understand the oil industry chain. This year, oil prices surged from over $90 to break the $100+ range, with a year-to-date increase of over 60%, setting recent extreme records. But how long can this rally last? Who are the true beneficiaries? I spent some time analyzing the logic and found that many people have actually fallen into traps.

First, the conclusion: not all stocks labeled with "oil concept" will rise. Similarly, with rising oil prices, some companies see their profits explode, while others are squeezed by costs. This involves the position within the industry chain.

Upstream exploration and production companies (like ExxonMobil and ConocoPhillips in the US stock market) are most sensitive to oil prices. For every $1 increase in oil, their profits can amplify by $20-30, making them the most direct beneficiaries among oil price-related stocks. But midstream pipeline transportation companies (such as Enbridge in Canada) are different—they earn through tolls, with revenue mostly fixed, so oil price fluctuations have little impact on them. Downstream refining and plastics companies (like Formosa Plastics, Formosa, and South Asia in Taiwan) are even more complex; crude oil is their cost, and product prices are key. Sometimes, a sharp rise in oil prices can even compress their margins.

Regarding the Taiwan stock market, many first think of the Formosa Plastics Four Treasures. Formosa Plastics is indeed the only refining plant in Taiwan; when oil prices rise moderately and downstream demand remains steady, its crack spread stays at a reasonable level, maintaining stable gross margins, making it the most direct oil-price-beneficiary stock in Taiwan. But for companies like Formosa and South Asia plastics, it’s necessary to consider the entire petrochemical cycle—they can’t just focus on oil prices. Only when oil prices rise steadily and downstream customers accept price increases will their operations perform well; otherwise, if oil prices surge but product prices don’t keep up, it results in the awkward situation of "oil rising stocks not rising."

If you want to access the US stock market, there are more options. Large integrated oil and gas stocks like ExxonMobil and Chevron cover upstream to downstream operations, making them highly sensitive to oil prices. But because of their scale and diversified assets, they have a stronger buffer during oil price declines, making them more resilient than pure upstream companies. Pipeline stocks like Enbridge in Canada have a high dividend yield of 7.1%, with stable cash flow, unaffected by short-term oil price fluctuations, suitable for dividend investors. For more flexibility, you can look at pure upstream companies like ConocoPhillips or LNG companies like Cheniere, which are more volatile but have strong profit elasticity, suitable for experienced traders doing swing trading.

From a fundamental perspective, the IEA and EIA forecast that by 2026, the global oil market will be oversupplied, with a daily surplus of 1.87 million barrels. This is the core factor suppressing long-term oil price increases and the key reason why blindly chasing high prices is risky. Currently, the oil price rally is mainly supported by geopolitical risk premiums. Once conflicts ease, oil prices could fall quickly, and a correction of 10-20% in the sector is quite normal.

Therefore, the investment logic for oil price beneficiaries is quite clear: in the short term, focus on geopolitical events and oil price volatility; in the medium term, consider the position within the industry chain; in the long term, watch for energy transition pressures. Avoid full positions; practice good stop-losses and position control to profit steadily through cyclical fluctuations. Recently, I’ve also been monitoring some swing opportunities in related stocks, but I filter them based on industry chain logic, not blindly chasing rallies. If capital is limited, oil ETFs are a good choice—they help diversify risk. If you want higher dividend returns, consider a portfolio mix, such as combining Formosa Plastics and Enbridge, which can track oil prices and provide stable dividends. In summary, understanding the industry chain structure is the right way to grasp the stocks that benefit from rising oil prices.