-- China Petroleum & Chemical or Sinopec (HKG:0386, SHA:600028) reported higher first-quarter earnings as it benefited from rising oil prices, offsetting the drop in sales during the period.
The Beijing-headquartered oil and gas company's attributable profit jumped 28% to 17 billion yuan from 13.3 billion yuan a year earlier, according to a Wednesday filing with the Shanghai Stock Exchange.
Earnings per share climbed to 0.141 yuan from 0.109 yuan.
Pre-tax profit surged 33% to 24.2 billion yuan from 18.3 billion yuan, which Sinopec attributed to inventory gains from higher crude oil prices and improved margins of refining by-products.
Higher crude prices helped Sinopec offset the 3.9% drop in revenue to 706.7 billion yuan from 735.4 billion yuan. Refined oil sales slipped to 55.5 million tonnes in the three-month period from 55.6 million tonnes in the prior-year period.
Meanwhile, total operating costs slid to 674.9 billion yuan from 722.4 billion yuan.
Sinopec's oil and gas production edged up to 131.5 million barrels of oil equivalent in the first quarter from about 131 million barrels a year earlier.
During the period, the oil and gas company said it adjusted production and operations to hedge for the impact of the Middle East conflict.
"Oil prices have potential for further upside and are expected to remain elevated throughout 2026," the South China Morning Post reported the same day, citing Shenwan Hongyuan (SHE:000166, HKG:6806) analyst Shao Jingyu.
Sinopec also warned of the impact of rising alternative energy consumption to the company. In Q1, Sinopec said China's demand for natural gas grew 3.1% year over year, but refined oil product consumption slipped 2.3% year over year.
Sinopec's results reflect normalcy despite tensions in the Middle East, according to a report by CLSA.
However, the real test for Sinopec could be seen in the second quarter, as supply disruptions during the war may have affected the oil and gas giant's imports, the financial services company said.
Sinopec earlier denied plans of purchasing oil from Iran but could tap state reserves, according to media reports.
For the two upcoming months, the company will reportedly adjust refinery output and increase refining yields in order to secure an adequate domestic supply.
S&P Global Ratings analysts believe Sinopec could be vulnerable to operational shocks due to its dependence on Middle East imports, Dow Jones reported separately.