EB Securities: "The three major oil companies" and oilfield services are responding to external uncertainties with certainty in their own development, highlighting strategic value.

EB SECURITIES released a research report stating that the "Three Oil Giants" and oilfield services are using their own developmental certainty to deal with external uncertainties, highlighting their strategic value. Since 2025, there has been increased geopolitical uncertainty, and China's energy security faces many external challenges. The "Three Oil Giants" are actively working on "increasing reserves and production" to ensure national energy security. From 2018 to 2024, the combined CAGR of the capital expenditure of the "Three Oil Giants" in the upstream sector was 6.6%. In 2025, the "Three Oil Giants" will continue to maintain high capital expenditure, with Petrochina, China Petroleum & Chemical Corporation, and CNOOC Limited planning upstream capital expenditures of 210 billion, 76.7 billion, and 130 billion yuan respectively. In 2025, the planned oil and gas equivalent production for the three companies will increase by 1.6%, 1.3%, and 5.9% respectively. The substantial capital expenditure input will effectively ensure the growth of upstream reserves and production, and the affiliated oilfield services of the "Three Oil Giants" are also expected to benefit. OPEC maintains its supply and demand expectations for crude oil, with OPEC+ increasing production by 180,000 barrels per day in May. In its June report, OPEC maintains its forecast for growth in global crude oil demand, predicting an increase of 1.3 million barrels per day in 2025. OPEC expects global oil demand in 2025 to continue to be strongly driven by aviation demand, with aviation kerosene demand expected to increase by 450,000 barrels per day, gasoline demand by 380,000 barrels per day, and demand for liquefied gas and naphtha by 500,000 barrels per day. On the supply side, OPEC maintains its forecast for non-OPEC+ supply growth, expecting an increase of 810,000 barrels per day in 2025. In May 2025, OPEC+ increased production by a cumulative 180,000 barrels per day, with voluntary cuts by 8 countries contributing an increase of 154,000 barrels per day, Saudi Arabia increasing production by 177,000 barrels per day, and previous excess production in Kazakhstan and Iraq decreasing. The May increase in production by the 8 countries with voluntary cuts was lower than the previously decided increase of 410,000 barrels per day. The IEA predicts that OPEC+ production will increase by 310,000 barrels per day this year, and by 150,000 barrels per day in 2026, and recommends close monitoring of the progress of OPEC+ production increases. The conflict between Iran and Israel has affected both countries' energy facilities, driving oil prices upwards in response to escalated geopolitical tensions. As of June 17th, both Iran and Israel have targeted each other's energy facilities. Israel attacked the Shahran oil depot in Tehran and two natural gas processing plants, resulting in the production stoppage of an offshore platform at the world's largest gas field, South Pars. BAZAN Group, the operator of Israel's largest refinery, stated that the power plant used for steam and electricity production was severely damaged in the Iranian attack, and all refinery facilities were shut down. The situation in the Middle East is unpredictable, with oil prices reacting strongly to news factors following a sharp increase on June 13th. Looking ahead, the main energy concerns have not been resolved: (1) Iran's announcement of withdrawing from the Iran nuclear negotiations could lead to increased sanctions affecting Iran's oil production and sales. From January to April 2025, Iran's crude oil production was around 3.3 million barrels per day, with exports of about 1.5 million barrels per day, accounting for 4% of global seaborne crude oil exports; (2) The risk of Iran closing the Strait of Hormuz still exists. As of 2025, around 11% of global maritime trade passes through the Strait of Hormuz, including 34% of seaborne oil exports, 30% of liquefied petroleum gas exports, 20% of liquefied natural gas trade, 18% of chemical trade, and 7% of automobile trade. If Iran closes the strait for exports, it will have a devastating impact on global oil trade. Geopolitical conflicts have increased the risk of global oil transportation, leading to oil prices expected to fluctuate upward due to uncertainty in the geopolitical landscape.