JP Morgan emphasized in its latest research that, amid rising oil price volatility and energy inflation expectations due to conflict-related news in Iran, PetroChina remains its top pick in the Asia-Pacific energy sector, maintaining a &#34;high conviction strong buy&#34; stance, believing that even under the assumption of oil prices at $60 to $65 per barrel, the stock's valuation is attractive.
According to the Wind Trading Desk, a report released on March 2 by analysts including Parsley Ong shows that its target price for PetroChina's H-shares is HKD 10 per share, based on a long-term oil price assumption of $60 to $65 per barrel. If the long-term oil price assumption is raised to $80 per barrel, the target price will increase to HKD 13.7, while the target price for A-shares will be RMB 18.5, corresponding to an upside potential of 45% to 70%.
On the market side, renewed war between the U.S. and Iran has intensified concerns over crude oil supply, leading to a significant rally in the A-share oil and gas sector on March 2, with PetroChina, Sinopec, and CNOOC achieving their first-ever collective closing limit-up. Among them, PetroChina's stock price reached a nearly 11-year high.
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JP Morgan believes that the current rise in oil prices reflects more of a short-term geopolitical risk premium rather than a sustained tightening of supply and demand dynamics. Its baseline scenario anticipates about a week of high volatility and slight supply disruptions, estimating that a risk premium of about $10 per barrel has already been factored into oil prices; it prefers companies with high upstream weight and lower exposure to spot VLCC freight rates, noting that rising logistics costs for refining companies may erode profit margins.
<h2>Even at $60 oil, it remains cost-effective</h2>
The report points out that PetroChina is considered a &#34;value and defensive attribute dual&#34; stock among Asian energy companies, and even if oil prices fall back to the $60 range, it still possesses valuation attractiveness.
Under the baseline assumption, JP Morgan expects PetroChina's net profit in 2025 to be RMB 155 billion, providing a judgment of about 10 times price-to-earnings ratio and an approximately 5% dividend yield for H-shares, calling it &#34;one of the most attractive international oil and gas giants.&#34;
Under this assumption, the H-share target price is HKD 10; if the long-term oil price assumption is raised to $80/barrel, the target price will be adjusted to HKD 13.7, corresponding to an A-share target price of RMB 18.5, with an upside potential of 45%–70%.
<h2>VLCC rates impact refining profits, Sinopec may underperform PetroChina</h2>
In terms of individual stock differentiation, JP Morgan focuses on the spot exposure of VLCC (Very Large Crude Carrier). The report states that tensions in the Middle East have pushed VLCC rates to a six-year high, currently around $225,000 per day with limited downside potential; if conflicts near the Strait of Hormuz remain intense in the coming days, a rebound to $300,000 per day cannot be ruled out.
The report believes that Sinopec faces more significant logistics cost pressures due to its higher spot chartering exposure. The firm states that Sinopec typically accounts for 15% to 16% of the globally disclosed crude oil spot chartering volume
The calculations show that the VLCC spot rate has risen from USD 48,000 per day in the third quarter to USD 102,000 per day in the fourth quarter, which has doubled Sinopec's logistics costs for the fourth quarter to about USD 4 per barrel; based on the current spot rate, the estimated cost is about USD 8 per barrel, which may significantly erode refining profits.
The bank expects Sinopec to remain a net beneficiary of rising oil prices, but its stock performance may lag behind that of China National Petroleum Corporation and CNOOC, which have almost no VLCC spot exposure.
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<h2>Buffer and Supply Response: Inventory Advantage and OPEC Production Increase</h2>
In terms of supply-side response, JP Morgan believes that China has a stronger buffering capability. The bank estimates that China has accumulated over 1.5 billion barrels of crude oil inventory (strategic reserves + commercial inventory), equivalent to more than 100 days of processing coverage, and has natural gas inventory equivalent to 28 days of demand coverage, believing that China is in a position to utilize strategic reserves in March to hedge against potential disruptions.
At the same time, the report states that OPEC has announced an increase in production of 206,000 barrels per day in April and may further increase production in the event of significant supply disruptions. In response to the question of whether OPEC can increase production if the Strait of Hormuz is blocked, the bank noted that Saudi Arabia has reportedly increased production against the backdrop of rising geopolitical risks and has sent shipments to tanks and pipelines near demand centers in advance, ensuring a flow of at least 7 million barrels per day even in the event of disruptions in the strait

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JP Morgan believes that the rise in oil prices due to geopolitical conflicts may be difficult to sustain, and upstream leaders will be the core beneficiaries. PetroChina remains the top choice in the Asia-Pacific energy sector, even with a valuation advantage calculated at an oil price of $60. If oil prices maintain at $80, the upside potential could be as high as 70%. The surge in VLCC freight rates may suppress Sinopec's performance compared to PetroChina and CNOOC

- JPMorgan's latest research emphasizes that China National Petroleum remains its top pick in the Asia-Pacific energy sector amid rising oil prices due to conflicts in Iran, maintaining a "strong buy" rating.  
- The analysts set a target price of HKD 10 per share, assuming long-term oil prices of USD 60 to 65 per barrel; if this assumption rises to USD 80, the target could increase to HKD 13.7 per share.  
- The report highlights that while oil price hikes are seen as short-term risks, China possesses a considerable buffer with over 1.5 billion barrels of crude oil inventory, enough for over 100 days of processing.

JP Morgan: PetroChina is the top pick for energy in the Asia-Pacific region, still attractive even at a $60 oil price