Key Takeaways:
- CLSA expects oil above $80/bbl in H2 2026, down from $94 average in H1
- PetroChina and CNOOC may post 50% YoY Q2 earnings growth, CLSA said
- CLSA rates PetroChina (HKD12 TP), CNOOC (HKD36), Sinopec (HKD4.9) outperform
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CLSA rates PetroChina, CNOOC outperform with oil above $80
CLSA said oil prices will stay above $80 a barrel in the second half, supporting Chinese energy majors with 7% dividend yields.
"Considering damage to production facilities and infrastructure bottlenecks, global oil supply will not recover to pre-conflict levels in the Middle East over the next six to 12 months," CLSA said in a research report.
The broker forecasts Brent averaging above $80 a barrel in H2 2026, compared with $94 in the first half. West Texas Intermediate crude traded near $80 a barrel Monday after the US and Iran reached an agreement to end the nearly four-month conflict, according to CNBC. CLSA expects PetroChina and CNOOC to record roughly 50% year-over-year earnings growth in the second quarter.
The sustained elevated oil price outlook provides a buffer for Chinese state-owned producers as global crude retreats from earlier highs. CLSA assigns outperform ratings to all three major Chinese oil stocks, with preference in the order of PetroChina, CNOOC and Sinopec Corp.
CLSA set a HKD12 price target for PetroChina, citing balanced benefits from higher oil and natural gas prices. CNOOC received a HKD36 target, with the broker noting its removal from the US list of Chinese military companies may trigger a new round of re-rating. Sinopec Corp was assigned a HKD4.9 target, though CLSA cautioned its second-quarter earnings may face challenges.
The three stocks offer a roughly 7% dividend yield, making them relatively defensive choices during current market volatility, CLSA said. The broker's stock preference order places PetroChina first, followed by CNOOC and Sinopec.
The CLSA call signals that Chinese oil majors remain attractive income plays even as crude prices moderate from first-half peaks. Investors will watch second-quarter earnings reports due in August for confirmation of the projected 50% profit growth.
This article is for informational purposes only and does not constitute investment advice.
