According to a research report from CLSA, easing tensions in the Middle East have brought oil prices down to around $85 per barrel, with the market widely expecting a return to the $70 level. However, considering damage to production facilities and infrastructure bottlenecks, the brokerage forecasts that global oil supply will not recover to pre-conflict levels in the Middle East within the next 6 to 12 months.

The firm now anticipates oil prices will remain above $80 per barrel in the second half of the year, compared to an average of $94 in the first half. It expects Chinese oil stocks to benefit from this environment, recording their best profit and cash flow performance in recent years. Specifically, CLSA predicts that PetroChina (00857) and CNOOC (00883) will see second-quarter profits grow by approximately 50% year-on-year.

Amid current market volatility, CLSA views PetroChina and CNOOC as relatively safe investment choices due to their solid fundamentals and dividend yields of around 7%. The brokerage has assigned an "Outperform" rating to the shares of China's three major oil companies, with a preference order of PetroChina, followed by CNOOC, and then SINOPEC CORP (00386).

CLSA expects PetroChina to benefit most evenly from higher oil and natural gas prices, setting a target price of HK$12. For CNOOC, its removal from a U.S. list of Chinese military companies could trigger a new round of valuation reassessment, with a target price of HK$36. For SINOPEC CORP, second-quarter profits may face challenges, leading CLSA to set a target price of HK$4.9.