HSBC Global Research has issued a report predicting that earnings in the oil sector will nosedive in 2Q25, given that oil prices have already fallen by about 20% QTD. The broker estimated Brent crude prices to range US$65-67 per barrel from 2Q to 4Q in 2025, but the accelerated unwinding of production cuts by OPEC+ and other macro risks (such as global trade tensions) could pose further downside risks.

In HSBC Global Research's opinion, for every US$10/ barrel decline in Brent crude prices this year, CNOOC (00883.HK)  +0.260 (+1.503%)    Short selling $32.85M; Ratio 5.594%   will see its earnings wane by 16%/ 25% in 2025/ 2026 as it is the most sensitive to upstream exploration and production. Nevertheless, the broker kept a Buy rating on it in light of its low unit production costs and balance sheet at net-cash, which allows it to generate positive cash flow even in a low oil price environment. The target price for CNOOC's H-shares was lowered from $21 to $19.4.

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Among the three Chinese oil giants, HSBC Global Research continued to favor PETROCHINA (00857.HK)  +0.050 (+0.804%)    Short selling $16.51M; Ratio 8.308%   because of structural improvements in its natural gas business and operational efficiency, which have enhanced the quality of its free cash flow, with a dividend yield expected to reach 7.5%. The broker rated this company as Buy, naming it as the top pick in the sector, yet the target price for its H-shares was trimmed from $7.5 to $6.9.

In contrast, SINOPEC CORP (00386.HK)  +0.020 (+0.490%)    Short selling $128.09M; Ratio 52.104%   is facing an unfavorable outlook as its downstream refining and petrochemical businesses are being challenged by overcapacity and various macro risks. HSBC Global Research gave the company a Hold rating and reduced the target price for its H-shares from $4.5 to $4.2.
(HK stocks quote is delayed for at least 15 mins.Short Selling Data as at 2025-05-14 12:25.)