J.P. Morgan: PetroChina is the top energy stock choice in Asia-Pacific; attractive even at $60 oil price

JPMorgan Chase emphasized in its latest research that, as Iran-related conflict news boosts oil price volatility and energy inflation expectations, PetroChina remains its top pick in the Asia-Pacific energy sector, maintaining a “high conviction strong buy” view, and believes that even based on an assumed oil price of $60 to $65 per barrel, the stock’s valuation remains attractive.

According to Wind Chasing Trading Desk, a report released by JPMorgan analysts including Parsley Ong on March 2 shows that its target price for PetroChina H-shares is HK$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 is adjusted upwards to HK$13.7, with an A-share target price of RMB 18.5, corresponding to an upside potential of 45% to 70%.

On the market front, renewed war between the U.S. and Iran has intensified worries about crude oil supply. On March 2, the oil and gas sector in China's A-shares surged, with PetroChina, Sinopec, and CNOOC collectively hitting their daily trading limit for the first time in history. Among them, PetroChina’s stock price marked an 11-year high.

JPMorgan believes the current rise in oil prices mostly reflects short-term geopolitical risk premiums rather than a persistent tightening supply-demand dynamic. Its base scenario is about one week of high volatility and mild supply disruption, estimating roughly $10 per barrel of risk premium already priced into oil; it prefers companies with high upstream exposure and low spot VLCC freight exposure, warning that rising logistics costs for refining companies may erode margins.

Still Cost-Effective Even at $60 Oil

The report notes that PetroChina is a “value and defensive” target among Asian energy firms, and even if oil prices fall back to $60, it still maintains valuation attractiveness.

On the base assumption, JPMorgan expects PetroChina’s net profit in 2025 to be RMB 155 billion, gives about a 10x PE ratio and about 5% dividend yield for its H-shares, calling it “one of the most attractive global oil & gas majors.”

Under this assumption, the H-share target price is HK$10; if the long-term oil price assumption is raised to $80/barrel, the target price upgrades to HK$13.7, and the A-share target price is RMB 18.5, with an upside potential of 45%–70%.

VLCC Freight Hit Refining Profits—Sinopec May Underperform PetroChina

On stock differentiation, JPMorgan focuses on spot exposure to VLCCs (Very Large Crude Carriers). The report says Middle East tensions have pushed VLCC rates to a six-year high, at time of writing roughly $225,000 per day with limited room to fall, and if conflicts near the Strait of Hormuz remain intense in coming days, rates could rebound to $300,000 per day.

The report argues that Sinopec faces clearer logistics cost pressure due to greater spot charter exposure. The bank states that Sinopec usually accounts for 15% to 16% of global disclosed spot crude chartering volume.

Its calculations show that the VLCC spot rate rose from $48,000/day in Q3 to $102,000/day in Q4, doubling Sinopec’s Q4 logistics cost for 2025 to about $4 per barrel; based on current spot rates, costs would be about $8 per barrel, which could significantly erode refining profits.

The bank expects Sinopec to remain a net beneficiary of rising oil prices, but its stock performance may lag behind PetroChina and CNOOC, which have virtually no VLCC spot exposure.

Buffering and Supply Response: Inventory Advantages and OPEC Production Increase

On supply-side response, JPMorgan believes China has stronger buffering capabilities. The bank estimates China has accumulated over 1.5 billion barrels of crude oil inventory (strategic + commercial), covering more than 100 days of processing capacity, and has natural gas stocks equivalent to 28 days of demand coverage, believing China is well-positioned in March to use strategic reserves to offset potential disruptions.

Meanwhile, the report says OPEC has announced an April production increase of 206,000 barrels/day, and may further increase production if there are significant supply disruptions. Addressing the question of whether OPEC can boost supply if the Hormuz Strait is blocked, the bank writes that Saudi Arabia is believed to have increased output against a backdrop of rising geopolitical risks and has already delivered cargoes to tanks and pipelines near demand centers in advance, ensuring at least 7 million barrels/day throughput even if the strait is disturbed.

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