JPMorgan emphasized in its latest research that PetroChina continues to be its preferred stock in the Asia-Pacific energy sector, maintaining a "high conviction strong buy" rating. The bank noted that even under an oil price assumption of $60 to $65 per barrel, the stock's valuation remains attractive. This view comes amid heightened oil price volatility and energy inflation expectations driven by news of Iran-related conflicts.

According to the report issued by analysts including Parsley Ong on March 2, JPMorgan set a target price of HK$10 per share for PetroChina's H-shares, based on a long-term oil price assumption of $60–$65 per barrel. If the long-term oil price assumption is raised to $80 per barrel, the target price would increase to HK$13.7. For A-shares, the target price was set at RMB 18.5, implying an upside potential of 45% to 70%.

In market performance, concerns over renewed U.S.-Iran tensions and potential crude supply disruptions led to a significant rally in A-share oil and gas stocks on March 2. PetroChina, Sinopec, and CNOOC all hit their daily limit-up, marking the first time in history that all three closed at the涨停 limit. Among them, PetroChina's share price reached an 11-year high.

JPMorgan views the recent oil price increase as primarily reflecting short-term geopolitical risk premiums rather than a sustained tightening of supply and demand. Its base case anticipates approximately one week of high volatility and minor supply disruptions, with an estimated risk premium of around $10 per barrel already priced into oil prices. The bank prefers companies with higher upstream exposure and lower reliance on spot VLCC freight rates, noting that rising logistics costs could erode profitability for refining companies.

Even at $60 per barrel, PetroChina offers compelling value.

The report highlighted PetroChina as a stock that combines both value and defensive characteristics within the Asian energy sector. Even if oil prices fall back to the $60 range, the company's valuation remains appealing.

Under its base assumptions, JPMorgan forecasts PetroChina's 2025 net profit at RMB 155 billion, valuing the stock at around 10 times earnings. The H-shares are expected to offer a dividend yield of approximately 5%, positioning PetroChina as "one of the most attractive international oil and gas majors."

VLCC rate surge pressures refining margins; Sinopec may underperform PetroChina.

Regarding individual stock differentiation, JPMorgan focused on exposure to spot VLCC rates. The report stated that tensions in the Middle East have driven VLCC rates to a six-year high, currently around $225,000 per day with limited downside. If conflicts near the Strait of Hormuz intensify in the coming days, rates could potentially rebound to $300,000 per day.

The report indicated that Sinopec faces more significant logistics cost pressures due to its higher exposure to spot chartering. The bank noted that Sinopec typically accounts for 15% to 16% of globally disclosed crude oil spot charter volumes.

JPMorgan estimates that the increase in VLCC spot rates from $48,000 per day in the third quarter to $102,000 per day in the fourth quarter has already doubled Sinopec's 2025 logistics costs to approximately $4 per barrel. At current spot rates, costs could rise to around $8 per barrel, significantly eroding refining margins.

While Sinopec is still expected to be a net beneficiary of rising oil prices, its stock performance may lag behind that of PetroChina and CNOOC, which have minimal spot VLCC exposure.

Buffer and supply response: inventory advantages and OPEC production increases.

On the supply side, JPMorgan believes China has strong buffer capacity. The bank estimates that China has accumulated over 1.5 billion barrels of crude oil inventories (strategic reserves plus commercial stocks), equivalent to more than 100 days of processing coverage. Additionally, it holds natural gas inventories covering 28 days of demand, suggesting that China could utilize strategic reserves in March to hedge against potential disruptions.

Meanwhile, OPEC has announced an April production increase of 206,000 barrels per day and may further raise output if significant supply disruptions occur. Addressing concerns over whether OPEC can increase production if the Strait of Hormuz is blocked, the report noted that Saudi Arabia has reportedly raised output amid rising geopolitical risks and pre-positioned shipments to storage tanks and pipelines near demand centers. This would allow the kingdom to maintain flows of at least 7 million barrels per day even if the strait is disrupted.