Oil Prices Return to $110: CNOOC Leads 'Big Three' Oil Giants with 35% Net Margin
nashnova research
The US-Iran conflict has pushed crude close to $110/barrel; CNOOC posted a 35.36% net margin in H1, topping PetroChina and Sinopec. With Q3 oil prices up over 45%, full-year profits may surpass last year — yet three straight days of share-price declines hint the rally is losing steam.
Why did oil spike to $110?
The US-Iran conflict has nearly shut down the Strait of Hormuz — a chokepoint carrying roughly one-fifth of global crude shipments. Houthi attacks threaten the Bab el-Mandeb strait, forcing tankers to reroute around the Cape of Good Hope and sharply raising shipping costs.
Supply is squeezed on three fronts: unstable Middle Eastern output, Russia prioritizing domestic needs, and US inventories at historic lows.
Japan, South Korea, and other nations heavily dependent on Middle Eastern crude are stockpiling aggressively, adding demand-side pressure. This means → this rally is not a single-event shock but supply contraction + shipping disruption + panic hoarding hitting at the same time.
Which of the Big Three earned the most in H1?
CNOOC (00883) grew revenue 16.88% and net profit 23.42% to RMB 85.8 bn in H1, with a net margin of 35.36% and ROE of 20.05% — both far ahead of PetroChina and Sinopec.
PetroChina (00857) has the largest scale — 921 million BOE in output and RMB 103.9 bn in net profit — but crude output fell 2.8% year-on-year. Growth came from size, not efficiency.
Sinopec (00386) has the smallest upstream footprint: 263 million BOE in output, declining gasoline and diesel revenue, and net profit of just RMB 26.6 bn.
In plain terms = CNOOC is a pure upstream player — 86.78% of revenue comes from exploration and production. When oil prices rise, it captures the most profit. PetroChina wins on bulk. Sinopec's larger refining and chemical segment actually weakens its leverage to rising crude.
How much could Q3 profits grow?
Q3 oil prices rose over 45%. Extrapolating H1 average earnings, PetroChina's nine-month net profit is projected above RMB 155.9 bn and CNOOC's above RMB 128.7 bn — both on track to exceed full-year 2025 levels.
This means → Q3 earnings growth is highly certain — prices have already risen, and profits are just a matter of reporting. The real question is Q4: whether prices can hold.
What does Goldman Sachs expect for oil prices?
Goldman's latest note models two scenarios: if attacks on Hormuz and Red Sea shipping escalate, Persian Gulf output could fall 4 million bbl/day below pre-conflict levels, pushing Brent above $120/barrel.
If tensions ease and Middle Eastern supply gradually recovers, oil may fluctuate around a $80/barrel floor. The base case assumes output only 500,000 bbl/day below pre-conflict levels.
In plain terms = Goldman is saying: in the worst case oil can still climb another 10%; in the best case it never returns to cheap levels — $80 is the floor, not the ceiling.
Why is CNOOC the cheapest — and why do banks like it the most?
On trailing P/E, PetroChina trades at 9×, Sinopec at 14.1×, and CNOOC at just 7.3× — the strongest earner carries the lowest valuation.
Multiple banks rate all three "outperform." CLSA targets CNOOC at HK$32, Goldman raised its target from HK$21.1 to HK$31, BOCI sets HK$34.69, and CITIC CLSA HK$36 — each implying upside of more than 40%.
CNOOC's dividend yield exceeds 5.4%, the highest among the three. This means → the investment case is straightforward: low valuation + high profitability + high dividend. In a rising-oil-price cycle, CNOOC offers the greatest upside leverage.
Oil is up — so why are shares falling?
In the three trading sessions after the September 10 price surge, the oil sector posted three consecutive down days.
This reflects a possible "good-news fatigue" — the market had already priced in higher oil, and each new crude-price high is pulling less weight on share prices.
In plain terms = higher oil is a fact, but whether shares follow depends on whether the market believes oil can keep climbing. Three red days suggest some capital is already taking profits. Whether the price-to-share transmission is going numb is the key test for whether Big Three valuations can keep recovering.
市场有风险，内容仅供研究参考，不构成投资建议。