EB SECURITIES has published a research report stating that if the conflict between the United States and Iran persists, the regulatory mechanisms of the crude oil market could fail, leading to even greater market volatility.
China's three major oil companies—often referred to as the "Three Barrels of Oil"—possess domestic resources that serve as the foundation for ensuring the nation's energy security. Enhancing domestic supply capacity is a strategic pillar and a reliable pathway to guarantee energy security. These companies are expected to benefit significantly from rising oil prices. Furthermore, in a low-interest-rate environment, their dividend payout ratios have remained stable over the long term, making them relatively scarce as high-dividend-paying stocks. Current dividend yields for the "Three Barrels" remain attractive, highlighting their value for high-dividend allocation.
Ongoing Tensions in the Middle East Increase Crude Oil Market Volatility
Last week, heightened tensions in the Middle East drove a rapid increase in oil prices. As of July 24, Brent and WTI crude oil futures prices closed at $92.82 and $90.47 per barrel, respectively, up 5.2% and 10.6% from the previous week's close, and up 30.4% and 32.9% from the beginning of July. This week, the Houthi group began threatening Red Sea shipping, announcing a blockade of Saudi oil transported via the Red Sea, significantly increasing the risk to Saudi oil exports. However, on July 24, President Trump ordered US forces not to strike Iran that day, breaking a 13-day streak of US airstrikes on the country and cooling market expectations regarding the geopolitical situation.
The report estimates that negotiations between the US and Iran on issues like strait transit rights, sanctions, and the nuclear program are unlikely to reach an agreement in the short term. During this period, military conflicts and partial blockades of the strait will continue to impact oil prices. During the previous round of US-Iran conflict, buffer reserves in the crude oil market were heavily depleted. Although global oil inventories monitored by the IEA saw their first increase in June since March, rising by 21 million barrels, this was primarily due to a sharp increase in oil at sea, far exceeding the ongoing drawdown of onshore storage tanks. The increase in floating storage resulted from a brief opening of the Strait of Hormuz and a rush by Middle Eastern countries to ship crude. With the strait closing again, this inventory replenishment mechanism is at risk of failing. If the US-Iran conflict continues, the market's regulatory mechanisms could break down, leading to more significant price swings.
Strong Performance at High Oil Prices and Strengthened Energy Security Needs Enhance the "Three Barrels'" Strategic Value
The "Three Barrels" are expected to fully benefit from higher oil prices. The report estimates that if the oil price benchmark rises from $85 per barrel to $100 per barrel, the operating profit from PetroChina's oil exploration and production business could increase by approximately 28 billion yuan. Sinopec's oil exploration and production business operating profit could rise by about 4.5 billion yuan, and CNOOC's net profit attributable to shareholders could increase by roughly 24 billion yuan. The US-Iran conflict severely disrupts the transport of key raw materials like Middle Eastern crude oil, naphtha, and liquefied natural gas (LNG), posing a significant threat to China's supply of energy and petrochemical feedstocks.
The "Three Barrels'" proprietary domestic resources are China's foundation for ensuring its own energy security. Boosting domestic supply capacity is always a strategic support and a reliable way to guarantee energy security. Additionally, as key state-owned enterprises and globally operating multinational corporations, the "Three Barrels" actively serve as pioneers in "going global," deeply participating in global energy governance. They continuously optimize their asset structures, business portfolios, and regional layouts, enhance their ability to utilize energy resources, and improve the construction of energy transport corridors. These efforts provide vital support for ensuring national energy supply and accelerating the energy revolution, while also making positive contributions to global energy development.
Valuations Return to Low Levels, High Dividend Allocation Value of "Three Barrels" Becomes Prominent
As of July 24, 2026, the A-share PB-MRQ for PetroChina, Sinopec, and CNOOC were 1.24, 0.75, and 1.81 times, respectively. Their H-share PB-MRQ were 1.00, 0.54, and 1.16 times, respectively, representing a significant decline from the highs seen in March. The "Three Barrels" have historically valued shareholder returns, with projected payout ratios for 2025 at 55% for PetroChina, 76% for Sinopec, and 45% for CNOOC. According to a Wind consensus forecast as of July 24, the 2026 dynamic dividend yields for PetroChina A-shares and H-shares are 5.1% and 6.4%, respectively. For Sinopec, the 2026 dynamic dividend yields for A-shares and H-shares are 5.4% and 7.5%, respectively. For CNOOC, the 2026 dynamic dividend yields for A-shares and H-shares are 4.8% and 7.5%, respectively.
In a low-interest-rate environment, the "Three Barrels'" dividend payout ratios have remained stable over the long term, making them relatively scarce among high-dividend-paying stocks. Current dividend yields for the "Three Barrels" remain attractive, highlighting their value for high-dividend allocation.
Risk Analysis: Upstream capital expenditure growth may fall short of expectations, and crude oil and natural gas prices could experience significant fluctuations.