Crude oil and refining: Quarter two performance

Crude oil prices continued to reflect delicate balance of adverse market sentiment on demand due to economic headwinds, and supply risk from geopolitical tensions.  Unpredictable trade policy of the United States amplified economic uncertainty prompting a volatile view of demand.  Heightened supply risk considered deepening tensions between Iran and Israel and fears of a broader conflict.  Volatile U.S. trade policy initially distorted fundamental demand trends and the decline in prices seen in Q1 accelerated into April.  Renewed military action between Iran and Israel set a floor to prices in May and spurred a sharp increase into June.  Brent crude relaxed from an average of US$69/bbl in April to US$64/bbl in May, before rebounding to over US$76/bbl by mid-June.  

The first quarter had already seen a sustained decline in crude oil prices after tightened sanctions on Russian oil exports prompted prices to peak at a five month high approaching US$82/bbl opening January.  Brent prices fell steadily into March as the incoming U.S. administration set an agenda of increased domestic crude production and trade barriers.  Prices bottomed out below US$70/bbl, before recovering as geopolitical tensions countered a more lenient OPEC+ strategy on supply management. Q1 ended with Brent approaching US$75/bbl.  

Wide-ranging trade tariffs announced by the Trump administration on April 2nd abruptly stalled oil prices.  A minimum tariff of 10 percent was proposed on all goods imported to the United States.  Further “reciprocal” tariffs on many trading partners extended to 50 percent or more.  Market confidence plunged following announcement of sector specific tariffs including a 25 percent levy on the automotive industry.  Brent prices plunged almost 20 percent and dropped below US$65/bbl moving into April.  News of a 90-day pause to implementation of most reciprocal tariffs steadied market sentiment somewhat and oil prices firmed towards US$70/bbl by the middle of April.  Repeated escalation of punitive tariffs with China towards 150 percent soon soured market sentiment and Brent prices found a floor approaching US$60/bbl.  

Unwinding of voluntary supply cuts by the OPEC+ group placed a further burden on the downturn of oil prices into May.  After beginning to reinstate production in April, the group announced in May that it would bring an additional monthly increase of 0.4 mmb/d to market in June.  Signals that Saudi Arabia was willing to tolerate a lower price point for crude oil, coupled with renewed global economic pressures depressed oil prices to test a four year low.  Repeated deferment of scheduled higher tariffs steadied crude oil prices through May as wider trade deals were considered.   

Abrupt escalation of geopolitical tensions due to renewed military action between Israel and Iran prompted crude oil prices to rebound sharply into June.  A widening risk premium on supply side balanced negative demand side influence of the previous months’ tariff-driven economic uncertainty.  Brent prices rallied to the highest since early January and approached US$78/bbl by mid June.  

Cost of petrochemical feedstocks sourced from the refinery largely followed turbulent crude oil prices.  The lower price point for crude oil tested in April and May relaxed the feedstock cost burden for many petrochemicals.  Naphtha prices resisted seasonal strength in gasoline values alongside more subdued demand for petrochemicals.  Sharp fall of crude oil prices into April revived refinery margins approaching peak season for transportation fuels, ahead of abrupt rebound of crude oil price into June..  

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Quarterly Business Analysis: Global - Petrochemicals, Polymers and C1 Chemicals – Q2 2025 

The Quarterly Business Analysis provides key insight into production economics for a broad range of commodity petrochemicals, polymers and C1 chemicals.  The analysis presents a review of costs, prices and margins for typical production assets, providing a valuable view of regional and value chain competitiveness and is is available for each key price setting region - Asia Pacific, recently added Middle East, Western Europe and the United States.  A quarterly report provides insightful commentary to illustrate current trends, related to recent market developments.  The accompanying database is updated monthly. 

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