There's been a pretty interesting phenomenon lately—every time there's a disturbance in the Middle East, oil prices surge, and related oil concept stocks also start to fluctuate wildly. I've noticed that this year, Brent crude oil has already broken through the $100 mark, hitting a record high in recent years, which has led many to seriously consider investment opportunities in oil-related assets.

Speaking of oil concept stocks, many people's first reaction is to blindly chase the rally, but that's actually the easiest way to get caught in a trap. The key factor that determines whether an oil price surge concept stock will be profitable isn't short-term price rankings, but rather its position within the entire oil industry chain. Similarly labeled as "oil concept stocks," some are directly benefiting from the rally, while others face higher costs and compressed profits.

In simple terms, the oil industry chain can be divided into several segments. Upstream includes companies like ExxonMobil and ConocoPhillips that directly explore and extract oil; for every $1 increase in oil prices, their profits can expand by $20-$30, making them most sensitive to oil price changes. Midstream companies like Enbridge in Canada mainly collect transportation fees and are less affected by oil price fluctuations. Downstream companies, such as Formosa Plastics and Formosa Petrochemical in Taiwan, use crude oil as raw material costs, and their profits depend on the margin between costs and selling prices for products like gasoline and plastics.

For Taiwanese investors, the Formosa Four Giants are the easiest oil price surge concept stocks to access. Formosa Petrochemical is Taiwan's only refinery; when oil prices rise moderately and downstream demand remains steady, crack spread margins stay reasonable, gross profit margins remain stable, and stock prices tend to rise accordingly, making it the most direct beneficiary. Formosa, Nan Ya, and Taiwan Fertilizer focus more on the plastics sector; their profits are influenced not only by oil prices but also by the entire petrochemical cycle—only when oil prices steadily rise and downstream customers are willing to accept higher product prices will their performance shine.

If you want to enter the U.S. stock market, there are more options among oil concept stocks. ExxonMobil and Chevron are global oil and gas giants, covering the entire industry chain; when oil prices rise, the entire industry benefits, and profits are highly elastic. However, due to their large scale and diversified assets, they tend to be more resilient during oil price declines, making them suitable for medium- to long-term investment. Enbridge in Canada offers a high dividend yield of up to 7%, with stable cash flow, and is completely unaffected by short-term oil price fluctuations—making it a typical dividend-paying stock, suitable for buy-and-hold investors.

Regarding the investment highlights of oil price surge concept stocks, I believe there are three core points. First, oil stocks are economic cycle amplifiers; when the economy is booming, soaring energy demand directly pushes up oil prices, and upstream companies' profit growth far exceeds the rate of oil price increases. Second, geopolitical events drive the market—if conflicts erupt in the Middle East or ships are blocked in the Red Sea, oil prices can jump 20-30% in the short term, and related stocks can rebound quickly. Third, oil companies generally offer much higher dividends than other industries; when oil prices stay above $70, cash flow is abundant, and they continue to reward shareholders through high dividends and share buybacks.

But risks must also be clearly understood. If demand plummets, oil prices could crash by 20-50%, and oil stocks would also tumble sharply. In the long run, the widespread adoption of electric vehicles and carbon tariffs will continue to limit the valuation space for upstream companies. Some companies may become overly optimistic at high oil prices and expand production excessively, only to face crises during cyclical lows—these are pitfalls to avoid.

For small investors, it's not necessary to analyze individual stocks. Oil ETFs like Yuanta Oil ETF allow entry with less than 3,000 TWD, tracking global oil-related assets, diversifying risk, and being suitable for complete beginners. If you want to pick stocks yourself, a combination of Formosa Petrochemical and Formosa Plastics can follow oil price swings to profit from spreads while also earning stable dividends. For those with the capacity to explore U.S. stocks, Enbridge in Canada paired with ExxonMobil offers high dividends and resilience, making it a good choice.

From a fundamental perspective, by 2026, the global oil market is expected to be oversupplied, which is a core factor suppressing long-term oil price increases. However, if geopolitical risks persist, oil prices will continue to support the cash flow and stock prices of oil stocks, and the cash returns from oil surge concept stocks will remain relatively high. The key is not to go all-in; proper stop-loss measures and position control are essential to steadily profit from cyclical fluctuations.