KUALA LUMPUR (Sept 14): PETRONAS Chemicals Group Bhd (KL:PCHEM) rose to a three-month high amid a rally in petrochemical refiners as oil prices surged amid renewed conflict in the Middle East.

Brent, the global benchmark for crude oil, extended its gains above US$100 while West Texas Intermediate that guides US markets rose to US$103 per barrel, boosting hopes for higher petrochemical prices and spreads.

PETRONAS Chemicals on Monday rose as much as 23 sen or 4.5% to RM5.32, its highest since June 12. At 3pm, the counter pared some of its gain to RM5.25 as nearly nine million shares exchanged hands.

At market close, the counter pared some of its gain to RM5.27, still up 18 sen or 3.54%, from its previous closing price of RM5.09, as 15.95 million shares exchanged hands.

Shares of PETRONAS Chemicals — which manufactures olefins, polymers, fertilisers, methanol, and specialty chemicals — are off highs but are still up nearly 50% from when the year started. At the last price, the company has a market capitalisation of RM42.16 billion.

Analysts, however, are cautious of further upside in PETRONAS Chemicals shares after the recent rally with only nine ‘buy’ calls among 21 research houses. The remaining eight recommend 'hold' and four has the stock on ‘sell’ ratings, according to Bloomberg.

The consensus 12-month target price stood at RM5.07, implying a downside of about 3% from the last price.

Hengyuan Refining Company Bhd (KL:HENGYUAN), which distils crude oil into petrol, diesel and other products, added 21 sen or 6.48% to settle at RM3.45 while rival Petron Malaysia Refining & Marketing Bhd (KL:PETRONM) gained six sen or 1.73% to RM3.53.

The conflict in the Middle East intensified over the weekend, as Yemeni government forces launched attacks against Iran-backed Houthi rebels along the Red Sea. The Houthis fired into Saudi Arabia that supports Yemen’s government.

Last week, the Houthis captured an island on the Bab el-Mandeb Strait, a crucial shipping alternative to the Strait of Hormuz controlled by Iran.