Abundant shale oil resources were recently found in the organic‐rich Permian Lucaogou (P2l) Formation shale, Jimusar Sag, Junggar Basin. Although some scholars have conducted some researches on the basic geochemical characteristics of the Lucaogou Formation shale, it is not enough to effectively guide the shale oil exploration in the area. This is because during the exploration process of shale oil, besides the basic geochemical characteristics of shale, its mineral composition, physical properties, and oil‐bearing characteristics are all very important evaluation parameters. To systematically evaluate the favourable shale oil exploration sections in the Lucaogou Formation, 265 pieces of shale cores were sampled from well Ji174 in this study. Besides the basic geochemical characteristics of the 265 pieces of cores, the mineralogical, petrophysical, and oil‐bearing characteristics were also analysed. Results show that the shale has abundant organic matter (average total organic carbon 3.51%, average petroleum generation potential 15.67 mg/g), dominated by Type II1 and Type II2 kerogen, and has entered the early‐mature to mature stage. The Upper Member of the Lucaogou Formation has relatively higher organic matter and organic matter type is relatively more oil prone compared to the Lower Member; however, organic matter thermal maturity is lower. The P2l Formation shale is characterized by high carbonate minerals and low clay minerals, and when considering mineralogical brittleness, both the Upper and Lower members are ideally fracturable in shale oil development. The P2l Formation shale has a wide porosity range (1.1–13.9%), and the Lower Member's porosity is slightly greater. The inversion of shale porosity in the P2l Formation is controlled by the differentiated mineral composition. The oil saturation index values of the Lower Member shale are significantly greater than the Upper Member shale. From the above, the Lower Member of the P2l Formation shale is ideally suited and has greater shale oil potential in the Jimusar Sag, Junggar Basin, especially in the depth intervals of 3,255–3,272, 3,282–3,298, and 3,317–3,334 m in the well Ji174.