1. Report Industry Investment Rating - The investment rating for liquefied petroleum gas (LPG) is "Bullish" [1] 2. Core Viewpoints of the Report - The current LPG market is dominated by geopolitical conflicts, and it is difficult to make judgments without considering the geopolitical situation. The development of the geopolitical situation will determine whether the Strait of Hormuz will be open for passage. As of March 31, 2026, the Strait of Hormuz remains blocked, and there is a possibility of further escalation of the conflict, which may drive LPG prices higher. The overall strategy is to go long at low prices. It is expected that the price of the domestic PG main contract will test the previous high again, with a reference target price of 7,400 yuan, and the reference target price for the overseas FEI main continuous contract is 1,000 US dollars. If the military conflict has a clear outcome, the Strait of Hormuz may open, leading to a price correction. However, even if the strait is解封, it will take time for the reduced associated LPG supply to return to the pre - conflict level, and the overall supply will still be tight year - on - year, making it difficult for the price center to return to the beginning - of - year level. In the medium term, if the geopolitical disturbances subside and the Middle East supply recovers well, the LPG price in the second quarter may be the annual high. In the second half of the year, as the US terminal export capacity expands and there is a possibility of combustion demand being replaced by other energy sources, the supply - demand margin will widen significantly compared to the second quarter under geopolitical conflicts [3][4][60] 3. Summary by Directory 3.1 2026 Q1 Liquefied Petroleum Gas Market Review - In Q1 2026, the LPG market was characterized by "unexpected" events. Geopolitical contradictions in the Middle East led to the obstruction of the Strait of Hormuz, causing the prices of energy and chemical products to rise and fluctuate sharply. From January to February, the market focused on the contradiction between the restocking demand of PDH plants in China under low - profit and low - inventory conditions and the sufficient shipments from the US and the Middle East. The prices of domestic and overseas markets fluctuated widely within a range. In March, the geopolitical conflict escalated, and the blockade of the Strait of Hormuz disrupted the global LPG trade structure, turning the market from oversupply to significant undersupply. The domestic PG contract followed the upward trend of energy and chemical products in March, but the market start was delayed. As the blockade continued, the domestic PG contract saw a supplementary increase [13][14] 3.2 Geopolitical Conflicts Reshape the H1 2026 Supply Pattern 3.2.1 US Terminal Constraints on Export Growth and Difficult Inventory Reduction - US LPG supply increased by 7.1% year - on - year from January to February, and the growth rate of oil and gas field LPG was 7.5%. The STEO report in March was too conservative in its production forecast. With the increase in crude oil prices in March, it is expected to stimulate more crude oil production and increase NGLs output. The weekly production of propane and propylene in the US reached a high of 2.89 million barrels per day in early March, a 3% increase from February. The overall US LPG supply is in line with the initial expectations, with an estimated annual production growth rate of 4.3% in 2026, slightly down 0.2%. The domestic demand in the US is normal. Due to the increase in supply and stable demand, the US propane inventory is difficult to reduce and may enter a stockpiling channel, with the absolute level 70% higher than the same period last year. The export in Q1 was normal, but the current terminal export capacity is insufficient, and the next terminal capacity expansion is not expected until June. It is estimated that the propane inventory will reach 100 million barrels in the middle of the year [21][22] 3.2.2 Uncertainty in Middle East Q2 Exports - As of March 22, 2026, the total LPG exports from the Middle East were 8.85 million tons, and the Q1 exports are expected to be around 9 million tons, a 20% year - on - year decrease. The blockade of the Strait of Hormuz has a huge impact on Middle East LPG exports, and it is difficult to bypass the strait. The subsequent export volume in the second quarter depends on the resumption of passage in the Strait of Hormuz. In addition, major oil - producing countries in the Middle East have reduced their crude oil production due to the inability to export. The total crude oil production reduction of four major Middle East oil - producing countries may reach up to 6.7 million barrels per day, accounting for nearly 7% of the global crude oil production. The LPG production of Qatar's gas fields is expected to be damaged by 13%, with a monthly production loss of about 100,000 tons. When the strait is blocked, the monthly export volume of the Middle East may be 550,000 - 730,000 tons. After the strait is解封 and before the crude oil production recovers, the estimated monthly export volume is about 3.6 million tons [33][34][35] 3.3 Q2 Demand Under Pressure, Performance Depends on Supply Recovery 3.3.1 Impact on Asian Demand Under Continuous Strait Blockade - Under the continuous blockade of the Strait of Hormuz, the Middle East LPG supply is cut off. Asian demand is significantly affected, mainly in India's combustion demand and China's chemical demand. India is the most affected country, with about 90% of its LPG imports from the Middle East and used for combustion. China imports about 50% of its LPG from the Middle East for chemical use. India's LPG arrivals have declined since March 15, and China's imports are expected to be affected in April. If the blockade persists, there is a possibility of permanent substitution of combustion demand by other energy sources and demand loss due to economic impact [38][39] 3.3.2 Good Demand Performance Excluding Geopolitical Impact - Excluding March, which was significantly affected by geopolitical events, the import volume of Asian countries in January and February showed stable growth, with a 3.4% year - on - year increase in the total imports of China, Japan, South Korea, and India. India's imports in January and February were in line with expectations, but were significantly affected in March. Japan and South Korea's imports increased by about 9% year - on - year in January and February but declined in March. China's imports were weak in January and February due to low PDH plant profits and low开工 rates. The PDH开工 rate is expected to drop to 50% in April, further reducing propane demand [45][46] 3.4 Supply - Demand Balance Summary 3.4.1 Significant Shortage Under Continuous Blockade - Under the continuous blockade of the Strait of Hormuz, the Middle East supply drops to about 650,000 tons per month, far lower than the monthly average of 4 million tons in 2025. Even with a 150,000 - ton - per - month increase in US exports in the first half of the year, the supply gap cannot be filled. To achieve supply - demand balance, demand destruction through high prices is necessary. India's minimum necessary import volume and available inventory days for LPG will determine the market's actual spot liquidity [57] 3.4.2 Market Balance in the Transition Phase After Strait Reopening - In the transition phase after the Strait of Hormuz is reopened, assuming the crude oil production reduction of major oil - producing countries remains at 6.7 million barrels per day, the Middle East supply will improve significantly to 3.6 million tons per month. Asian combustion demand can be fully met, and the balance mainly depends on the marginal adjustment of chemical demand. With the expected 50% PDH开工 rate in April, the reduction in propane demand is about 500,000 tons per month, which offsets the LPG supply loss in the Middle East. Coupled with the 150,000 - ton - per - month increase in US supply, there is room for a 5% increase in the PDH开工 rate or for major combustion - demand countries like India to replenish their safety inventories. However, if the geopolitical conflict intensifies and causes long - term damage to oil and gas facilities, the LPG supply loss in the Middle East needs to be further adjusted. It will take at least 1 - 2 weeks for the main Middle East supply to return to the market after the strait is reopened, and this period may be the most chaotic [58] 3.5 Summary and Outlook - In terms of supply, the US maintains a high - level export, but the terminal capacity bottleneck restricts further export growth, leading to inventory accumulation. Middle East supply is limited under the current strait blockade, and the actual supply level in the second quarter is highly uncertain. On the demand side, the current undersupplied market is testing India's minimum necessary LPG import volume for combustion and inventory levels, and China's PDH chemical demand is under pressure, with the开工 rate expected to drop to about 50% in April. The LPG price is expected to rise further if the conflict escalates, with the domestic PG main contract price testing the previous high of 7,400 yuan and the overseas FEI main continuous contract price reaching 1,000 US dollars. After the conflict is resolved and the strait is reopened, the price may correct, but the supply will remain tight year - on - year, and the price center may not return to the beginning - of - year level. In the medium term, if geopolitical disturbances subside, the second - quarter LPG price may be the annual high, and the supply - demand margin will widen in the second half of the year [59][60]

Report Industry Investment Rating - The report gives a "sideways" rating for liquefied petroleum gas [1] Core Viewpoints of the Report - The widening of the FEI - MB spread since August is mainly due to trade flow changes and cargo flow bottlenecks driving up transportation costs, and it is expected to weaken marginally after late August as the Panama congestion eases, but the space for reverse shorting is limited. If the Far - East arrival schedule is significantly delayed and the stocking demand in September is not fully met, FEI may remain relatively strong until October [2][4][13] - The CP contract price has been weak since July, and the low relative valuation in the next two months is expected to continue. The ongoing long - term contract negotiations in India, port congestion, and high freight rates suppressing FOB negotiations may continue to affect the price performance of the CP contract [3][4][30] Summary by Relevant Directory 1. FEI's Relative Valuation Strengthens, Trade Flow Changes and Cargo Flow Bottlenecks Drive up Transportation Costs - In July, both domestic and foreign LPG prices were weak, with the weakening absolute price, gas - oil ratio, and near - month spread reflecting weak market sentiment. The weak fundamentals of the LPG commodity and poor spot sentiment were the main negative factors. The supply - demand pattern of LPG in the second half of this year is expected to be looser than in the first half, weaker than previously expected [12] - In August, the near - month spread and relative valuation of FEI strengthened significantly, especially the sharp widening of the FEI - MB spread. The core reason is the increase in transportation costs caused by trade flow changes and cargo flow bottlenecks. The spread is expected to weaken marginally as the Panama congestion eases, but it is difficult to provide a good opportunity for reverse shorting [13] - Since April, affected by Sino - US tariff policies, LPG trade flows have changed significantly. The increase in long - distance trade volume has led to an increase in ton - mile transport demand and a relative tightening of available fleet capacity, causing freight rates to rise continuously since May. In August, the congestion of the Panama Canal was the core reason for the strengthening of the FEI/MB spread, but the spread is not expected to continue rising. The congestion is likely to improve significantly by the end of August at the latest [18][21][22] 2. Indian Long - Term Contract Negotiations and Seasonal Port Congestion May Continue to Suppress the Absolute Price of CP Contracts - Since July, the CP price has been continuously weak and its valuation is low. The CP official price, which had been relatively strong since the beginning of the year, reversed in July and continued to decline in August. In addition to the loosening of supply and demand, the long - term contract negotiations in India have also put additional pressure on the CP price. It is expected that the official price of CP in September may still be low [30][31] - India's demand has maintained a high growth rate this year, but port congestion during the summer may continue to affect the performance of the CP contract price. High freight rates suppressing FOB negotiations may also contribute to this. It is likely that the CP will increase the arrival premium without increasing the absolute price in the short term [32] 3. Summary and Investment Suggestions - The spread between FEI and MB is expected to weaken marginally after late August as the Panama congestion eases, but the space for reverse shorting is limited. If the Far - East arrival schedule is significantly delayed and the stocking demand in September is not fully met, FEI may remain relatively strong until October [37] - The low relative valuation of CP in the next two months is expected to continue. The long - term contract negotiations in India, port congestion, and high freight rates suppressing FOB negotiations may continue to affect the price performance of the CP contract, and it is likely that the CP will increase the arrival premium without increasing the absolute price in the short term [37]

Report Investment Rating - The report gives a "sideways" rating for crude oil [5] Core Viewpoints - In the short term, oil prices will be affected by the change in the US stance towards Russia, with an upward risk. The potential decline in Russian exports due to the US threat of imposing secondary tariffs on countries buying Russian oil has not been fully priced in. The short - term volatility of oil prices is expected to increase. In the medium to long term, the risk of supply glut remains high [3][21] Summary by Directory OPEC+ to Exit 2.2 million b/d Voluntary Cuts One Year Ahead - On August 3, 2025, OPEC+ decided to increase the production target by 547,000 b/d in September 2025. The eight countries will adjust the voluntary cut exit process flexibly according to market conditions. OPEC+ will exit the 2.2 million b/d voluntary cuts (and a 300,000 b/d production baseline increase for the UAE) one year ahead, with the September production target rising to around 36.3 million b/d [8] - OPEC+ actual production adjustment lags behind the increase in production targets, and the expectation of the peak demand season has supported the slight upward shift of the oil price fluctuation range since July [8] - In June 2025, OPEC+ total production was 34.69 million b/d, slightly lower than the agreement target. The production of 8 voluntary - cut countries increased by 394,000 b/d, with a slower - than - planned increase but a faster growth rate than the previous month. Iraq and Russia's production was still below the target, while Kazakhstan continued to over - produce, and Saudi Arabia's production was significantly higher than the target due to temporary measures [11] - After exiting the 2.2 million b/d voluntary cuts, there are still two layers of cuts to be exited. Saudi Arabia may accept lower oil prices for some time to pressure other members. After the seasonal demand weakens, the risk of inventory build - up is high, and the current baseline expectation is that OPEC+ may pause further production increases after the September increase [15] US Threatens to Increase Sanctions, Risk of Russian Export Disruptions Rises - US President Trump has pressured Russia to reach a cease - fire agreement with Ukraine by August 8, threatening to impose secondary tariffs on countries buying Russian oil. The EU has also announced the 18th round of sanctions against Russia [18] - The "secondary tariff" measure may lead to more complex tariff frictions between the US and China or India, and have a negative impact on the economy and oil demand. Indian refineries have increased crude oil purchases from non - Russian markets. If the tariffs are implemented, Russian exports may decline. However, the market is still skeptical about whether the US will severely crack down on Russian energy exports [19] Investment Advice - Since the third quarter, oil prices have been relatively strong. The supply glut risk is not prominent during the peak demand season, but the contradiction in the supply - demand fundamentals may emerge after the seasonal demand weakens. The US tariff policy may further suppress demand growth expectations, and the long - term risk of supply glut remains high [21]

1. Report Industry Investment Rating - The investment rating for the oil industry is "Oscillation" [1] 2. Core Viewpoints of the Report - OPEC+ decided to maintain a production increase plan of 411,000 barrels per day in July, with the current production policy mainly aiming to maintain market share. The accelerated production increase by OPEC+ has led to a risk of supply surplus, and the over - production situation in some member countries has not shown obvious improvement [2][3][24] - The demand in major markets is currently relatively stable, but the market's outlook for medium - and long - term demand remains cautious, and it is difficult to drive oil prices up in the short term. The increase in global on - land crude oil inventories since the second quarter is the main factor suppressing the upside space of oil prices [3][24] 3. Summary by Relevant Catalogs 3.1 OPEC+ Production Increase Plan in July - Eight member countries (Saudi Arabia, Iraq, the UAE, Kuwait, Algeria, Russia, Kazakhstan, and Oman) will increase production by 411,000 barrels per day in July. The gradually increasing production may be suspended or reversed according to market conditions. The eight countries also agreed to fully compensate for any excess production since January 2024 [10] - As of April, the total production of OPEC+减产 countries was 34 million barrels per day, basically in line with the upper limit of the total production target. The actual production of the eight voluntary - production - cut countries was 30.81 million barrels per day, with an increase lower than the planned increase [10] - In April, the eight voluntary - production - cut countries still exceeded the production limit by about 260,000 barrels per day. Kazakhstan was the main over - producing country, with a production of 1.82 million barrels per day in April, still exceeding the target by about 350,000 barrels per day [11] 3.2 Reasons for OPEC+ Production Increase and Member - Specific Situations - The main purpose of the eight core member countries to accelerate production increase is to maintain their market share. Saudi Arabia and the UAE have high idle production capacity and strict past production - cut implementation, with high potential for future production increase [2][13] - Kazakhstan's over - production has deteriorated this year. Its current production is close to the capacity limit, and future production increase space is limited. Due to the government's limited ability to intervene in the production of major oil fields, it is difficult for Kazakhstan to reach the OPEC+ agreed production target, which may threaten the stability of the alliance [14][16] 3.3 Supply Situations in Iran and Venezuela - Iran's supply is expected to remain stable in the short term. Although the US has upgraded sanctions on Iran's oil trade, it has not yet caused substantial damage to Iran's export volume. However, Iran's floating storage inventory has reached a one - year high, indicating a decline in turnover efficiency [18] - Venezuela's crude oil production and export volume have declined. After Chevron's withdrawal, the lack of investment and stable diluent supply will be the main factors hindering Venezuela from maintaining production [19] 3.4 Investment Suggestions - In the short term, geopolitical conflict risks have caused disturbances, but it is difficult to continuously boost oil prices. The demand during the peak season needs time to be observed, and the increase in global on - land crude oil inventories is suppressing the upside space of oil prices [3][24]