Ping An Securities: Geopolitical tensions cool down, while disruptions in crude oil supply remain volatile.

Ping An Securities released a research report stating that on February 17th, OPEC+ is considering delaying a series of monthly supply increase actions scheduled to start in April. In addition, Iraq recently stated that although they hope the Kurdistan region will resume oil exports within two days, they will still adhere to OPEC+ oil quota policies. This means that the US will need to find new supply increases to ease the continued strict sanctions on Iran. The short-term risk of supply reduction is supporting oil prices. Although the progress of ceasefire negotiations between Russia and Ukraine and Israel and Palestine has reduced geopolitical risks overall, the pessimistic expectations for the fundamental outlook of crude oil in the first half of 2025 have improved marginally due to factors like OPEC+ extending production cuts and restrictions on Iranian oil exports. Therefore, short-term supply disruptions continue to provide some support to oil prices, with Brent oil prices expected to average around $75/barrel in 25H1, down by approximately $6.64/barrel year-on-year. In the short term, the increased US sanctions on Iran and Russian "shadow" ship fleet are affecting the exports of Iranian and Russian crude oil. Refineries facing higher costs after being unable to purchase sanctioned oil and having to buy alternative grades will provide support to oil prices. Additionally, short-term supply disruptions like damage to the Russian CPC pipeline are favorable for oil prices. In the medium to long term, China will seek more diversified sources of crude oil supply, continue to explore overseas investment opportunities, and gradually enhance the development and utilization of domestic resources to ensure the stability of domestic resource supply. Currently, commercial crude oil in the US is entering an accumulation stage, but refined oil products are showing a slight destocking trend. Although there are marginal signs of improvement in production and consumption activities in Europe, the overall situation remains weak with no significant increase in crude oil demand. Chinese gasoline production and sales data are still weak, and diesel demand is expected to stablely grow during March's minor peak season. It is recommended to focus on leading oil companies that are actively exploring domestic oil and gas resources, have clear goals for storage and production increases, and have great potential for overseas market development: PetroChina (601857.SH,00857), China Petroleum & Chemical Corporation (600028.SH,00386), CNOOC Limited (600938.SH,00883), Offshore Oil Engineering (600583.SH), China Oilfield Services (601808.SH,02883). Risk Warning 1) Risks of weakening macroeconomic trends leading to weak demand: If the economies of Europe, the US, and other emerging economies such as China do not recover as expected, it may lead to weak international crude oil demand, posing a risk of reassessing the fundamentals. 2) Risks of supply disruptions: Risks of OPEC+ changing crude oil supply plans and adjusting production plans; uncertainties exist in US oil companies adjusting capital spending, the speed of shale oil production release, and the number of drilling rigs starting operations. 3) Uncertainties in the role of monetary policy: The Federal Reserve has initiated an interest rate cut cycle, but there is still significant uncertainty about its impact on the economy and oil demand. 4) Uncertainties in geopolitical situations: Changes in geopolitical situations can cause major disruptions in oil price trends. 5) Risks of energy iteration: Risks of new energy accelerating the replacement of traditional energy sources, and risks of policy adjustments for net zero emissions by 2050.