UBS: Lowering Brent oil price forecast for this year and next, lowering target price for China's three barrels of oil.

UBS released a research report stating that it has lowered its average price expectations for Brent crude oil in 2026 and 2027 from $93 per barrel and $85 per barrel to $84 and $75 per barrel, respectively, reflecting the possibility that oil supply through the Strait of Hormuz may return to normal. The price of Brent crude oil has recently fallen to around $70 per barrel, exceeding UBS's previous expectations. However, as the conflict in the Strait of Hormuz has not been completely resolved, oil supply through the strait still faces risks. UBS expects the price of Brent crude oil to rebound to $80 per barrel in the second half of 2026. Since the beginning of the second quarter of 2026, the prices of crude oil, transportation, and insurance have remained high, and PetroChina, a giant in the refining sector, faces many challenges: 1) The capacity utilization rate of state-owned refineries has dropped from 81% in early March to 68%; 2) The bank forecasts that gasoline/diesel sales may significantly decrease in the second quarter of 2026 due to high prices suppressing demand; 3) The rise in crude oil and transportation costs squeezes profit margins. Looking ahead to the third quarter, after the recent fall in oil prices, refineries may incur inventory losses. In the long run, as crude oil prices stabilize and China's refining and chemical capacity growth slows down, the bank expects PetroChina's downstream business to enter an upward cycle. Considering UBS's adjustment of oil price forecasts and its cautious outlook on the refining industry, the bank has lowered profit expectations and target prices for the three major Chinese oil companies, but has maintained a "buy" rating. UBS has adjusted PetroChina's (00857) 2026 adjusted net profit forecast down by 7% to RMB 190.8 billion, and lowered its H-share target price by 10% from HKD 14.2 to HKD 12.8. It has adjusted CNOOC's (00883) adjusted net profit forecast down by 6% to RMB 168.7 billion and lowered its H-share target price by 11% from HKD 37.8 to HKD 33.6. It has adjusted SINOPEC CORP's (00386) adjusted net profit forecast down by 13% to RMB 39.4 billion and lowered its H-share target price by 10% from HKD 7.1 to HKD 6.4.