Crude oil and refining: Quarter three performance

Crude oil prices again reflected balancing of competing influences, namely bearish supply demand sentiment and short-term supply risk arising from geopolitical events.  Negative price pressure was exerted by continued unwinding of previous supply cuts by OPEC+ group, and weakening Chinese economic data, leading to expectations of oversupply into 2026.  These factors were countered by risk of enhanced U.S. sanctions on Russia and Iran, ongoing Middle East geopolitical shocks (notably Israel’s attack on Qatar) and strong reserve building by China.  Average prices were broadly flat, with Brent crude settling in a relatively narrow range (US$65/bbl to US$69/bbl).   

Quarter three began with Brent rising to around US$70/bbl in the first week of July, on the back of increased U.S.-Iran tensions as Iran blocked International Atomic Energy Agency (IAEA) inspectors from nuclear sites, risking further U.S. sanctions.  Prices remained within the US$68/bbl-US$70/bbl range through to 25th July, with markets already having priced in impact of the OPEC+ announcement of a 548 kbpd supply increase through August.  Unwinding of 2.2 mmbd of previous voluntary supply cuts was greater than previous months.  OPEC+ cited better than expected economic signals as a driver of the supply increase, although market observers pointed to above-quota production by some group members. 

Prices rebounded to exceed US$72/bbl by the end of July, following positive demand signals (conclusion of a compromise U.S.-EU trade deal).  Consensus perception of supply shortened as the U.S. President suggested a “deadline” for Russia to engage in meaningful moves on peace with Ukraine, backed by threat of enhanced sanctions and potential measures against countries importing Russian crude. 

Brief price gains were swiftly lost in the following week and Brent returned to around US$65/bbl by mid-August, after OPEC+ accelerated August supply increase with announcement of a further 547 kbpd increase through September.  The August and September increases were four times previously agreed monthly increments and implied full unwinding of the first tranche of supply cuts will be completed by end-September.  The price slide through was accelerated by hopes of progress on Ukraine peace efforts. 

Prices recovered gradually in the second half of August, ending the month at US$68/bbl, supported by ramping U.S. pressure on importers of Russian oil, further Ukrainian attacks on Russian refineries and infrastructure, strong Chinese refinery activity and ongoing Chinese reserve building.   OPEC+ announced yet more supply increases, with quotas slated to rise 137 kpbd through October.  This move sees the bloc beginning to unwind a second tranche of earlier cuts a year ahead of schedule.  This suggests a move towards prioritisation of market share over price defence.  Weaker than expected Chinese economic data further subdued prices in September although this was mitigated by ongoing pressure on Russian supply.   

Brent prices averaged US$70/bbl through July and August, compared to US$69/bbl in Q2.  Cost of petrochemical feedstocks sourced from the refinery broadly tracked stable price point for crude oil.  LPG offered a modest seasonal cost advantage over naphtha costs.  Strong diesel cracks, resulting mainly from tight supply in Europe, pushed higher refining margins in the U.S. and Europe.  

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Quarterly Business Analysis: Global - Petrochemicals, Polymers and C1 Chemicals – Q3 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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