"The 'Three Oil Giants' earnings conference responds to Middle East shocks: recent crude oil and refined oil supplies are unaffected"

For more than a month, fighting has continued to spread, and the situation in the Middle East has been moving in a direction that is harder to predict and harder to control. In 2025, China’s external dependency on imported crude oil was 72.7%, and on natural gas was 40%. How much impact will the global energy storm sweeping across the world have on domestic supply? In recent days, at full-year 2025 performance briefings, the listed companies under the three major state-owned oil and gas central enterprises have responded in a flurry of statements to the shock from the Middle East.

On March 30, China National Petroleum Corporation (601857.SH/00857.HK) held its performance briefing in Hong Kong, where its chairman Dai Houliang said the company’s operations are currently generally normal. Crude oil and natural gas imported through the Strait of Hormuz account for about 10% of the company’s total operating volume, so the company’s two major oil and gas industrial chains can maintain a relatively high load and stable operation over the long term. However, he noted that the company’s investment business in the Middle East has indeed been affected to varying degrees. Last year, the company developed an emergency plan for keeping trade stable to ensure industrial-chain and supply-chain safety and stability. It is currently being implemented in an orderly manner, and will be continuously tested and improved in practice.

CNPC is China’s largest oil and gas producer and seller. Dai Houliang said that although the Middle East situation is still not optimistic, the company diversifies its sources of raw materials to spread risk, with upstream supply remaining sufficient; more than 90% of load capacity can operate steadily and stably over the long term. In addition, with increased investment in innovative R&D, the company’s expectations for its chemical business performance this year are optimistic.

As the world’s largest refining company and the second-largest chemical company, Sinopec (600028.SH/00386.HK) deputy chairman Zhao Dong, at a performance briefing held on March 23, said that when formulating this year’s refining and processing volume plan, the company did not factor in war-related considerations, and instead arranged production and operations entirely according to its normal business plan. Since the outbreak of the war, the company has, at the first moment, launched an emergency response mechanism, closely monitored developments in the situation, and formulated multiple sets of contingency plans to address different scenarios.

He revealed that in March Sinopec made a slight adjustment to its processing volume, but it does not affect overall market supply. In April and May, it will also make appropriate arrangements according to how the situation develops. The top priority is to ensure product supply. “First, we must ensure the supply of finished petroleum products for society—that is our first responsibility. Judging from current crude oil inventories and finished product inventories, we believe there is no problem in the next two months.”

He said that after the Strait of Hormuz was shut down, some crude oil resources within the Gulf could not be shipped out, which has had some impact on crude oil supply. The company has expedited the procurement of crude oil exported from Saudi ports via the Gulf of Aden (by adjusting pipeline routes to avoid the Strait of Hormuz), while also actively expanding crude oil supply sources from non-Middle East regions. When asked about the impact of high oil prices on different businesses, he said that soaring oil prices have driven costs on the resource end up significantly, and freight and insurance costs have also risen sharply. The company expects the refining and petrochemical business to face considerable challenges, but the finished petroleum product sales business will remain broadly steady, and the upstream business can achieve better benefits at current oil prices.

On March 23, the National Development and Reform Commission announced temporary control measures on domestic finished petroleum product prices. This move will effectively slow down the impact brought by abnormal international oil price increases, ease the burden on downstream users, and ensure steady economic operation and people’s livelihoods.

Zhao Dong said that the mechanism for forming domestic finished petroleum product prices is not fixed and unchangeable. The company is actively applying to relevant national ministries and commissions for policy support, focusing on securing the use of social responsibility reserves. Relevant national departments will also continue to track crude oil inventories, finished product inventories, and supply conditions in the national market, and will issue policies dynamically to support enterprises’ production and social energy security.

CNOOC (600938.SH/00883.HK) is China’s largest offshore crude oil and natural gas producer. Compared with CNPC and Sinopec, which operate in an integrated manner, CNOOC, a pure upstream oil and gas exploration and development player, has performance that is more tightly linked to oil price movements, with less “drag” from refining and chemical processing; therefore, it benefits more in a high oil price environment.

At a performance briefing held on March 26, Mu Xiuping, senior vice president and chief financial officer of CNOOC, said that with recent oil price fluctuations being significant, the company has an internal mechanism for attaching to oil prices: the company’s selling oil price is generally settled one month in advance, from crude oil production to crude oil sales—generally, settlement occurs after the calculation one month ahead for the following month, as part of an overall progressive calculation process. The recent rise in oil prices is broadly favorable for the company overall, and as it is gradually booked into the accounting, it will increasingly be reflected in results.

Under the temptation of high oil prices, will oil companies quickly increase production?

“Whether the recent price growth will affect our capital expenditures this year or in the future depends on how the overall situation develops. At present, the situation still has uncertainty—how long can oil prices remain at a relatively high level? No one can answer.” Yan Hongtao, senior vice president of CNOOC, said the company will continue to track and assess how the overall situation develops in order to determine the specific work for the next step. At the moment, it is still proceeding steadily according to the established rhythm, the set target tasks, and the workload.

“Oil prices are something we can’t control, but costs can be controlled. If we control costs, the company’s competitive advantages can always exist.” Huang Yongzhang, vice chairman, executive director, chief executive officer and president of CNOOC (600938.SH/00883.HK), said that increased geopolitical risk has heightened oil price volatility and also added uncertainty to the international energy landscape. Cyclical ups and downs are normal in the industry. The fundamental way to deal with cycles lies in a company’s internal strength.

At the online performance briefing held on March 30, Mu Xiuping said the company is expected to benefit from the rise in international oil prices in the first quarter of 2026, but it is still too early to predict the company’s full-year 2026 performance. The company does not forecast the trajectory of international oil prices and profit in 2026.

The reporter from The Paper: Yang Yang

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