Investment Strategy Analysis Report on the Energy Sector Amid Geopolitical Risks

Based on the latest market data and geopolitical developments, I will provide you with a detailed investment analysis report on the energy sector.

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According to the latest reports, the Syrian government forces have occupied the major oil and gas fields in eastern Syria [1]. This development has multiple potential impacts on the global energy market:

• Restructuring of Supply Patterns
  : The change in control of eastern Syrian oil and gas fields may alter the energy development landscape in the region, and U.S. oil interests in Syria will also be affected
• Geopolitical Risk Premium
  : Any geopolitical event involving major oil-producing regions will push up the crude oil risk premium in the short term
• Impact on Regional Stability
  : Changes in the control of oil and gas fields may exacerbate regional tensions and increase the possibility of supply disruptions

Since early 2026, Middle East geopolitical risks have continued to disrupt the crude oil market, with prices showing characteristics of sharp volatility [2]:

Indicator	Peak on Jan 14	Pullback on Jan 16	5-Day Cumulative Gain
WTI Crude Oil	$62.02/barrel	$59.19/barrel	+10.77%
Brent Crude Oil	$66.52/barrel	$63.76/barrel	+10.94%

: The market is highly sensitive to geopolitical news, with significantly amplified price volatility. Once there are signals of eased tensions, prices will quickly give back gains.

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As a core indicator for measuring the performance of the U.S. energy sector, the Energy Select Sector SPDR Fund (XLE) has performed steadily recently [3]:

Time Horizon	Price Change	Market Position
1-Day	+0.17%	Top-performing sector
5-Day	+2.01%	Outperforms broader market
1-Month	+8.07%	Significant excess returns
YTD	+4.47%	Leading the market
52-Week Range	$37.24 - $48.65	Moderate volatility

, one of the world’s largest integrated energy companies [3]:

Indicator	Value
Latest Closing Price	$129.89
52-Week Gain	+12.88%
Market Capitalization	$547.8 billion
P/E (TTM)	18.78
Beta Coefficient	0.36 (Relatively low volatility)

[3]:

Indicator	Value
Latest Closing Price	$166.26
52-Week Gain	+16.13%
Beta Coefficient	0.52

According to the latest sector performance data [4], the energy sector (+0.07%) has shown relative resilience amid the market correction, outperforming sectors such as technology (-0.51%), healthcare (-0.69%), and communication services (-1.17%), demonstrating typical defensive characteristics.

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According to technical analysis data [3]:

Indicator	Value	Signal Interpretation
MACD	No Crossover	Bullish Bias
KDJ	K:74.7, D:73.3, J:77.4	Buy Signal
RSI	Normal Range	No Overbought/Oversold
Support Level	$45.65	20-Day Moving Average
Resistance Level	$48.12	Recent High
Trend Judgment	Range-bound Oscillation	No Clear Direction

Indicator	Value	Signal Interpretation
MACD	No Crossover	Bullish Bias
KDJ	K:82.3, D:77.2, J:92.4	Overbought Warning
RSI	Overbought Range	Risk Warning
Support Level	$122.29	20-Day Moving Average
Resistance Level	$131.16	Recent High
Trend Judgment	Range-bound Oscillation	Waiting for a Breakout

The Beta coefficients of the energy sector indicate a low correlation with the broader market (XOM Beta=0.36, XLE Beta=0.52), which means that during periods of rising geopolitical risks, energy stocks can often provide a certain degree of hedging protection.

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: As the world’s most important oil transit channel, the Strait of Hormuz transports approximately 20 million barrels of oil per day, accounting for more than 25% of global seaborne oil trade [5]. Any talk of closing the strait will immediately trigger market panic.

: Contract terms in the modern energy market have shortened from 5-7 years in the 1970s to approximately 3 years, making the market more sensitive to short-term geopolitical shocks [5].

Geopolitical Event → Supply Concerns → Futures Market Reaction → Spot Price Adjustment → Energy Stock Valuation Changes
     ↓
  Rising Risk Premium → Amplified Volatility → Changes in Investor Sentiment → Capital Flow Adjustments

According to UN News analysis, during the 2025 Middle East conflict, market concerns about the shipping safety of the Strait of Hormuz and the risk of potential nuclear disasters drove significant fluctuations in oil prices [5]. However, structural changes are reshaping the long-term landscape of the energy market:

• Increasingly diversified supply sources
• Improved strategic petroleum reserve systems
• Accelerated transition to renewable energy

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: Seize volatility opportunities driven by geopolitical events

Strategy Type	Operation Recommendations	Risk Control
Event-Driven	Accumulate high-quality energy stocks on dips	Set a 5-7% stop-loss
Options Strategy	Buy out-of-the-money call options	Control premium proportion to <2%
Sector Rotation	Moderately increase holdings in the energy sector	Maintain sector neutrality

:

• Preferred Choices: Exxon Mobil (XOM), Chevron (CVX)
• Sector ETF: Energy Select Sector SPDR (XLE)
• Diversified Allocation: Consider appropriate allocation to oil and gas pipeline operators (e.g., MPLX)

: Balance geopolitical risks and fundamental improvements

:

Asset Class	Recommended Weight	Allocation Logic
Integrated Oil and Gas Giants	40%	Steady operations, strong risk resistance
Upstream Exploration and Development Enterprises	25%	High elasticity, benefits from price increases
Oil and Gas Pipelines/Storage	20%	Stable cash flow, less affected by volatility
Clean Energy Transition Targets	15%	Long-term trend, risk diversification

[3]:

• Current P/E of Exxon Mobil: 18.78x
• Current P/E of Chevron: Approximately 14-16x (relatively reasonable valuation)
• Current P/E of XLE: 18.88x

:

• Allocate assets negatively correlated with energy stocks (e.g., utilities, government bonds)
• Use energy-related ETFs to construct protective put strategies
• Maintain a moderate cash position to cope with extreme volatility

:

• Consider buying Brent crude oil futures call options
• Allocate to safe-haven assets such as gold (3-5% position)
• Pay attention to investment opportunities in energy-related convertible bonds

Avoidable Actions	Reason Analysis
Chasing Ups and Selling Downs	Geopolitically driven volatility is often rapid and sharp
Excessive Concentration	A single event may lead to significant drawdowns
Ignoring Fundamentals	Long-term investment still requires attention to corporate profitability
Leveraged Operations	Leverage risks are significantly amplified in high-volatility environments

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According to market institution forecasts [2], the three major factors affecting the oil market in 2026:

Factor	Impact Direction	Certainty
Geopolitical Situation	Upward (Risk Premium)	High Uncertainty
Macroeconomy	Downward (Weak Demand)	Medium Certainty
Industry Supply and Demand	Downward (Supply Glut)	High Certainty

Institution Forecasts	WTI Crude Oil	Brent Crude Oil
Annual Average	Approximately $60/barrel	Approximately $56/barrel
Fluctuation Range	$50-70/barrel	$55-75/barrel

:

1. Further deterioration of the Middle East situation
2. U.S. military action against Iran
3. Disruption of shipping in the Strait of Hormuz
4. OPEC+ production policy adjustments

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• Energy sector allocation ratio: 5-10%
• Core Holdings: Large integrated oil and gas enterprises
• Strategy Focus: Dividend income + capital preservation

• Energy sector allocation ratio: 10-20%
• Core Holdings: High-quality energy stocks + sector ETFs
• Strategy Focus: Balance of growth + income

• Energy sector allocation ratio: 20-30%
• Core Holdings: Upstream enterprises + leading companies in sub-sectors
• Strategy Focus: Seize volatility gains + event-driven opportunities

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:

• Military action developments in the Middle East
• Shipping safety status of the Strait of Hormuz
• OPEC+ production policy statements
• Progress in U.S.-Iran relations

:

• Changes in crude oil futures positions
• VIX index fluctuations
• Capital flows in energy stocks
• Crack spread trends

:

• U.S. crude oil inventory data
• Global oil demand growth rate
• Production changes in major oil-producing countries

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[1] Lianhe Zaobao - “Syrian Forces Have Occupied Major Oil and Gas Fields in the East” (https://www.zaobao.com.sg/realtime/world/story20260118-8119607)

[2] Sina Finance - “Middle East Geopolitical Risks Disrupt Crude Oil Prices, 10% Gain in Five Days” (https://finance.sina.com.cn/money/future/2026-01-16/doc-inhhnkez5614177.shtml)

[3] Jinling AI - Energy Sector Market Data and Technical Analysis [Data Source: API]

[4] Jinling AI - Sector Performance Analysis [Data Source: API]

[5] UN News - “Black Gold and War: Decoding Oil Price Volatility Amid Middle East Geopolitical Games” (https://news.un.org/zh/story/2025/07/1140290)

[6] Securities Times Network - “Geopolitical Changes Trigger Pullback in Crude Oil Futures” (https://www.stcn.com/article/detail/3598263.html)

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: January 18, 2026

: This report is for reference only and does not constitute investment advice. Investors should make prudent decisions based on their own risk tolerance. The energy market is highly affected by geopolitical factors, and price fluctuations may exceed expectations.