The conflict between Russia and Ukraine broke out, and the oil distribution station was at the $100 / barrel level. Russian President Vladimir Putin delivered a speech on the morning of February 24, 22, deciding to launch special military operations in the Donbas region, and the situation in Russia and Ukraine continued to heat up. Europe and the United States plan to impose sanctions on Russia. It is expected that Russian crude oil exports will be greatly affected, so as to further tighten the global crude oil supply. In 2020, the crude oil output of Russia and Ukraine was 524 million tons and 37 million tons respectively, accounting for 12.6% and 0.9% of the global crude oil output respectively. The market is highly sensitive to geopolitical events that may lead to tight crude oil supply. The market expects that the conflict between Russia and Ukraine will affect the global energy supply and lead to a sharp rise in oil prices. On February 24, 2022, the Brent crude oil futures price stood at $100 / barrel, with an increase of more than 9%, which is the first time that the Brent crude oil futures price has broken 100 since September 2014.
From the perspective of crude oil supply and demand fundamentals, the global crude oil supply and demand pattern continues to be tense. On the demand side, IEA released its monthly report in February, raising its crude oil demand forecast for 2022. It is expected that the global oil demand will increase by 3.2 million barrels / day to 100.6 million barrels / day in 2022; The low EIA inventory reflects that the trend of continuous recovery of crude oil demand has not changed. With the improvement of covid-19 vaccination rate, crude oil demand will still maintain the recovery trend. On the supply side, OPEC only increased production by 64000 barrels per day in January, which is far from the target of 250000 barrels per day. The decline of OPEC’s effective remaining capacity and the lack of global oil and gas capital expenditure still limit the repair of short-term crude oil supply. The supply and demand pattern of crude oil is expected to remain tight in 2022. The follow-up development trend of the recent conflict between Russia and Ukraine has a great impact on the short-term oil price trend.
The growth rate of capital expenditure of overseas giants decreased, and the medium and long-term crude oil supply was tight. The low oil price environment and epidemic situation since 2016 have kept the global oil and gas exploration expenditure low. In the post epidemic era, affected by shareholder return requirements and carbon neutrality, the capital expenditure growth planning of global oil giants is more cautious, or will remain at a low level for a long time; Under the background of carbon neutrality, overseas giants accelerate the transformation of new energy and focus on green energy projects. Traditional oil and gas investment is no longer favored; The downturn in capital expenditure of us shale oil manufacturers has led to a sharp decline in Duc and limited subsequent production expansion capacity. The capital expenditure of global oil enterprises is generally low, and the tight pattern of crude oil supply will continue.
Investment suggestion: since the beginning of the year, the oil price has continued to rise. We believe that the supply and demand pattern of crude oil in the past 22 years is tight, and we continue to be optimistic about the prosperity of the oil and gas sector. The upstream, oil service, coal chemical industry and light hydrocarbon cracking sectors are expected to fully benefit from the continuous rise of oil prices. It is suggested to pay attention to PetroChina, Sinopec, CNOOC and Enn Natural Gas Co.Ltd(600803) in the upstream sector; China Oilfield Services Limited(601808) , Offshore Oil Engineering Co.Ltd(600583) , Cnooc Energy Technology & Services Limited(600968) , Sinopec Oilfield Service Corporation(600871) , China Petroleum Engineering Corporation(600339) , Bomesc Offshore Engineering Company Limited(603727) of oil service sector; Shandong Hualu-Hengsheng Chemical Co.Ltd(600426) , Ningxia Baofeng Energy Group Co.Ltd(600989) , Luxi Chemical Group Co.Ltd(000830) of coal chemical sector; Satellite chemistry of light hydrocarbon cracking sector, Oriental Energy Co.Ltd(002221) . In addition, the undervalued leading white horse and large private refining and chemical sector will still benefit from the high outlook of the petrochemical industry. It is suggested to pay attention to the three major chemical white horses, Wanhua Chemical Group Co.Ltd(600309) , Shandong Hualu-Hengsheng Chemical Co.Ltd(600426) and Jiangsu Yangnong Chemical Co.Ltd(600486) ; Hengli Petrochemical Co.Ltd(600346) , Rongsheng Petro Chemical Co.Ltd(002493) , Jiangsu Eastern Shenghong Co.Ltd(000301) , Hengyi Petrochemical Co.Ltd(000703) , Tongkun Group Co.Ltd(601233) in the private refining and chemical sector.
Risk analysis: geopolitical risk, the spread of Omicron strain, and the rapid growth of OPEC + production.
