Dow Chemical shares jumped 4.5% Friday after JPMorgan upgraded the stock to overweight from neutral, raising its price target to $40 from $26. The upgrade came as oil prices headed for their strongest weekly gain since spring 2020, driven by U.S.-Israel military operations against Iran that have disrupted shipping through the Strait of Hormuz.

Analyst Jeffrey Zekauskas noted that for each $10 per barrel change in oil prices, integrated margins for North American chemical companies typically shift by 4-5 cents per pound. For Dow, which sells 20-25 billion pounds of advantaged integrated ethylene derivatives annually, this translates to approximately $1 billion in annual EBITDA benefit. With 730 million shares outstanding, the economic benefit amounts to about $1.35 per share.

The upgrade marked the third positive call for Dow this week, following similar actions from BMO and KeyBanc. The conflict near the Strait of Hormuz has kept the vital waterway closed to commercial traffic for nearly two weeks, creating market dislocations that analysts say could benefit Dow's integrated chemical operations.