Key Takeaways:
- BofA Securities cuts PetroChina target to HKD11 from HKD12, maintains Buy
- China's May crude imports fell 29% YoY to 7.8 million bpd
- Citi expects Brent crude to fall to USD60-65 per barrel before year-end
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BofA cuts PetroChina target to HKD11 as China oil imports slide 29%
BofA Securities cut PetroChina Co.'s price target to HKD11 from HKD12, citing China's 29% plunge in crude imports during May.
"China has become an important swing factor in global oil consumption," BofA Securities said in a report dated July 8, noting that customs data showed imports fell to 7.8 million barrels per day.
The broker trimmed its 2026 crude oil demand forecast to 15 million bpd, down 5% year over year, and cut net import estimates to 10.6 million bpd, an 8% decline. It reduced FY2026 and FY2027 earnings estimates for PetroChina by 8%, reflecting Brent crude price assumptions of USD77 for the second half of 2026 and USD70 for 2027.
The target cut comes as China's crude imports in May hit their lowest since February 2018, with purchases from Iran more than halving in June to about 654,000 bpd, according to Bloomberg data. Citi separately expects Brent to fall to USD60 to USD65 a barrel before year-end, adding to headwinds for the energy sector.
The supply outlook has also darkened. OPEC+ agreed to add 188,000 barrels a day to their output target for August, part of a plan to reverse production curbs made years ago. Iran has shipped more than 40 million barrels since the US lifted its naval blockade, while Russian exports have surged to record levels, according to Axi market analyst Tiago Lacerda.
The Strait of Hormuz remains a wild card. Iran has said free passage is available for only 60 days, after which it will impose tiered tolls based on a buyer's relationship with Tehran, FGE NexantECA Chairman Emeritus Fereidun Fesharaki said.
The downgrade shows Wall Street expects China's oil demand recovery to be gradual rather than swift, given ample inventories, weak domestic demand and persistent logistics bottlenecks. Investors will watch China's June import data, due in the coming weeks, for signs of whether the trend is stabilizing or worsening.
This article is for informational purposes only and does not constitute investment advice.
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