A sharp rise in global oil prices, driven by escalating geopolitical tensions in Iran and the broader Middle East, has heightened China’s exposure given its significant reliance on crude imports sourced from the region. Sustained high oil prices are likely to create a divergent impact on credit profiles across China’s oil and gas industry. Upstream exploration and production are benefiting from rising volumes and prices, supporting profitability and strengthening credit fundamentals. In the midstream refining, petrochemical, and oil transportation sectors, leading enterprises exhibit relatively strong resilience, while smaller private companies face heightened pressure. Downstream manufacturing and consumption segments encounter obstacles in cost pass through, resulting in widespread profitability challenges and rising credit risks, particularly among smaller enterprises.