Middle East Conflict Fuels Oil Price Surge: What Malaysian Investors Should Know

Tensions in the Middle East have once again disrupted global markets, this time due to a dramatic escalation in the Israel-Iran conflict. Over the past week, reports of Israeli strikes on Iranian nuclear and energy facilities, along with Iran's retaliatory military drills, have heightened fears of a broader regional war. One of the key areas of concern is the Strait of Hormuz, a narrow passage through which nearly 20% of the world’s oil is transported. As fears mount over potential disruptions to this vital supply route, oil prices have surged, with Brent crude inching closer to the USD 90 per barrel mark.

The spike in oil prices has triggered a chain reaction in global equity markets. While some sectors have faltered under the weight of geopolitical risk, energy-related stocks particularly those involved in oil production and logistics have surged. In Malaysia, oil and gas counters have gained significant investor attention, emerging as one of the few bright spots in an otherwise cautious market.

Oil & Gas Stocks Lead the Charge on Bursa Malaysia

Back home, local energy counters have outperformed the broader market as investors reposition their portfolios in response to rising crude oil prices. Among the most notable gainers are Hibiscus Petroleum, Dialog Group, Deleum, and Dnex, each uniquely positioned to benefit from the ongoing rally in the energy space.

Hibiscus Petroleum, a pure-play upstream oil and gas producer, has seen its share price jump sharply as traders bet on higher realised oil prices for its output. The company, which holds assets in Malaysia and the UK, stands to benefit directly from every increase in the price of Brent.

Deleum, which provides oilfield equipment and services, has also rallied on expectations that sustained higher oil prices will lead to increased exploration and maintenance activity, driving demand for its services.

Dialog Group has experienced a more measured but steady rise, thanks to its focus on storage and terminal operations. In periods of price volatility, storage becomes a valuable asset as companies look to hold crude in anticipation of further price hikes.

Meanwhile, Dnex has seen a surge in investor interest, supported by its exposure to both upstream oil projects and the broader tech infrastructure space, giving it a hybrid appeal in times of uncertainty.

Crisis as a Catalyst: The Case for Tactical Trading

Market volatility often creates opportunities for investors who are well-informed and quick to act. This geopolitical event, while deeply concerning on a humanitarian and diplomatic level, also opens a short- to medium-term window for gains, especially in sectors like energy where supply disruptions translate directly into pricing power.

Investors looking to capitalise on this situation should consider companies with direct exposure to oil price fluctuations, such as Hibiscus and Deleum. These names are sensitive to crude movements and can offer outsized returns during a rally. For those with a slightly more conservative risk appetite, Dialog offers steady earnings potential from storage and logistics providing a defensive layer in a volatile environment.

Timing and execution will be key. As with all geopolitical events, sentiment can shift quickly depending on diplomatic developments or changes in military posture. Investors should be prepared for sharp movements both upward and downward and consider risk management strategies such as setting stop-loss levels or taking profits on spikes.

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Navigating What’s Next

While it’s impossible to predict the full trajectory of the Israel-Iran conflict, one thing is clear: energy markets will remain sensitive to every new development. A further escalation could push oil above USD 95 per barrel, providing further upside for oil and gas stocks. Conversely, any signs of de-escalation such as peace talks or third-party mediation could trigger a pullback in prices, creating a new entry point for long-term investors.

For Malaysian traders, this is a moment to be vigilant, responsive, and strategic. The global spotlight on the Middle East has created unique momentum in the oil and gas sector, and those with the right tools and platforms stand to benefit the most. Rakuten Trade offers just that an efficient, low-cost gateway to seize market opportunities, backed by research and digital convenience.

Final Word

The turmoil in the Middle East is unsettling, but it also reminds us how interconnected global politics and financial markets have become. For those who follow the trends closely and are equipped with the right tools, such moments can be transformed into profitable opportunities. Oil and gas counters in Malaysia are already showing signs of strength, and with the right approach, investors can turn this market movement into gains.

Explore your trading potential with Rakuten Trade and let volatility work in your favour.