Guotai Haitong: The widening supply gap throughout the year is expected to have stickiness due to high oil prices.

Guotai Haitong released a research report stating that it is expected that Brent oil will maintain a strong trend in 2026. In April, the international oil price first fell and then rose, mainly affected by the fluctuating progress of the negotiations. The average price of Brent crude oil was $102.5 per barrel, up by 54.2% year-on-year and 2.9% month-on-month. Looking ahead, with the continued closure of the strait, the EIA and IEA predict an expansion of the supply gap for the whole year. Even if the negotiations progress smoothly, the oil price will still face a tight situation due to the slow recovery of supply, and high oil prices are expected to have stickiness. It is recommended to invest in oil and gas exploration and exploitation enterprises that benefit from high oil prices, as well as related enterprises with cost advantages in non-oil process routes, lightweighting, and coal chemical industry leaders. Guotai Haitong's main views are as follows: Supply side: Downgrade the annual supply forecast, OPEC+ deviates from target production. According to the forecasts of IEA and EIA, the global total crude oil supply in 2026 is expected to be 102.2 and 101.6 million barrels per day respectively, a year-on-year decrease of 4.0 and 4.75 million barrels per day, compared to the previous month's forecast adjustment of 2.50 and 2.72 million barrels per day. With the continued closure of the strait, EIA and IEA both downgraded their Q3 supply forecasts. The decline in supply mainly comes from OPEC+. OPEC+ production has been affected by geopolitical conflicts, with a monthly decrease of 1763 thousand barrels per day in April 2026. After considering a compensation for the reduction in production, it is 9986 thousand barrels per day lower than the target production, with the deviation increasing month-on-month compared to March. Demand side: Downgrade the annual demand forecast, with a larger reduction in demand in European OECD countries and gasoline. According to the forecasts of IEA, EIA, and OPEC, the global total crude oil demand in 2026 is 104.0, 104.2, and 106.4 million barrels per day respectively, a year-on-year decrease of 0.4, +0.19, and +1.22 million barrels per day, compared to last month's forecast adjustments of -0.33, -0.42, and -0.17 million barrels per day. By region, all three institutions have downgraded the crude oil demand in European OECD countries, with reductions of 0.12, 0.11, and 0.07 million barrels per day in Q2-Q4 respectively. In terms of downstream demand, according to IEA, global gasoline, LPG, ethane, and naphtha demands are year-on-year -164, -152, -80 thousand barrels per day, with monthly adjustments of -156, -97, -73 thousand barrels per day. Inventory side: Rapid reduction in land inventories, expansion of the annual supply-demand gap. Global crude oil total inventories accumulated in April were 13.8 million barrels, with floating inventories increasing by 30.9 million barrels and land inventories decreasing by 66.3 million barrels. By country, in April, China's crude oil inventories increased by 4.8 million barrels, Europe's crude oil inventories increased by 1.4 million barrels, US commercial crude oil inventories reduced by 4.5 million barrels, and strategic reserves reduced by 22.4 million barrels. IEA and EIA predict the global crude oil supply-demand balance in 2026 to be -1.8 and -2.6 million barrels per day respectively, with the gap increasing by 2.2 and 2.3 million barrels per day. It is expected that the global crude oil market balance for 2Q26-4Q26 will be -6.0, -1.9, and +1.5 million barrels per day and -8.5, -4.4, +2.0 million barrels per day, with increasing gaps compared to the previous month. Risk warning: Large fluctuations in oil prices; changes in OPEC+ production policies; excessive increase in production rates of non-OPEC+ oil-producing countries; slowdown in global economic growth and decline in oil demand; changes in geopolitical situations, etc.