China Galaxy Securities has released a research report stating that the current crude oil market is focused on the US-Iran situation, with short-term oil price volatility likely to intensify. The report suggests closely monitoring subsequent guidance from geopolitical situations, OPEC+ production policies, and global trade disputes. It forecasts an improvement in China's apparent crude oil demand for 2025, a slight increase in natural gas apparent demand, and a decline in apparent demand for refined oil products. The bank anticipates that the Brent crude oil price will fluctuate within a range of $60 to $70 per barrel in February 2026, with short-term price volatility expected to intensify due to geopolitical uncertainties. It recommends investment opportunities in areas such as PX, PTA, and petrochemical new materials. The main viewpoints of China Galaxy Securities are as follows: Oil prices trended higher in January. As of January 30th, the average monthly prices for Brent and WTI were $64.7 and $60.2 per barrel, respectively, up 5.0% and 4.1% month-on-month. On the supply side, geopolitical factors combined with the North American cold wave have heightened expectations of supply reduction. On one hand, the persistently tense US-Iran situation has driven risk premiums higher. On January 23rd, the US Treasury Department announced a new round of sanctions against Iran, targeting several companies related to oil and gas and multiple tankers. Furthermore, the US has repeatedly threatened military intervention in the Iranian situation. Currently, Iran's crude oil production exceeds 3 million barrels per day, with exports around 2 million barrels per day, accounting for approximately 3% of global supply. The market is concerned that if a US-Iran conflict erupts, Iranian crude oil exports could be disrupted. Additionally, if the situation deteriorates, the Strait of Hormuz could face a blockade crisis. On the other hand, due to extreme cold weather, major US oil-producing regions were forced to shut down some production facilities; according to Energy Aspects estimates, short-term US crude oil production may decline by about 300,000 barrels per day. On the demand side, as of January 23rd, the US refinery operating rate was 90.9%, down 3.8 percentage points from the beginning of the month. Following seasonal patterns, the US refinery operating rate is expected to decline further in the short term. Regarding inventories, as of January 23rd, US commercial crude oil inventories stood at 423.75 million barrels, an increase of 4.7 million barrels from the start of the month. The bank believes that the current crude oil market is focused on the US-Iran situation, and short-term oil price volatility may intensify, with Brent crude prices expected to trade between $60 and $70 per barrel in the near term. It advises closely monitoring subsequent guidance from geopolitical situations, OPEC+ production policies, and global trade disputes. China's apparent crude oil demand is expected to improve in 2025, with a year-on-year increase of 3.3%. In 2025, China's crude oil production is projected to be 216 million tons, up 1.5% year-on-year; crude oil imports are expected to reach 578 million tons, up 4.4% year-on-year; crude oil processing volume is forecast at 738 million tons, up 4.1% year-on-year; apparent crude oil consumption is estimated at 789 million tons, up 3.3% year-on-year; the external dependence rate will remain high at 73.2%. China's apparent natural gas demand is expected to see a slight increase in 2025, growing 2.4% year-on-year. In 2025, China's apparent natural gas consumption is projected to be 432.2 billion cubic meters, up 2.4% year-on-year, with a compound annual growth rate of 9.7% from 2010 to 2025; production is expected to be 261.9 billion cubic meters, up 6.3% year-on-year; imports are forecast at 176.7 billion cubic meters, down 2.7% year-on-year; the external dependence rate is projected at 40.9%, down 2.1 percentage points year-on-year. China's apparent demand for refined oil products is expected to decline in 2025, falling 1.5% year-on-year. In 2025, China's output of refined oil products is projected to be 413 million tons, down 1.4% year-on-year; exports of refined oil products are expected to be 36 million tons, down 0.6% year-on-year; apparent consumption of refined oil products is forecast at 377 million tons, down 1.5% year-on-year. Within this, the apparent consumption of gasoline, diesel, and jet fuel is expected to change by -2.5%, -1.2%, and +1.2% year-on-year, respectively. In 2025, benefiting from the continued recovery of the civil aviation industry, jet fuel demand is expected to maintain its growth trend; however, the ongoing substitution trend towards electric vehicles and LNG heavy-duty trucks will lead to a decline in the apparent consumption of gasoline and diesel, dragging down overall refined oil product consumption. Risk warnings include the risk of intensified international trade friction, the risk of a sharp rise in raw material prices, the risk of downstream demand falling short of expectations, the risk of declining prosperity in main products, and the risk of project production capacity failing to meet expectations.
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