JPMorgan’s top oil analyst: Yes, oil prices are falling—but nothing has actually improved.

Since the embargo began, non-Iranian exports from the Persian Gulf have remained largely stable; however, Iran’s exports—previously around 2 million barrels per day (mbd)—have nearly dropped to zero following the Trump administration’s embargo measures. This implies that the pre-existing supply deficit of approximately 14 mbd has likely widened further—to a shortfall of 15–16 mbd (the range reflects revisions and discrepancies in vessel-tracking data). Inventory side: Acting as a buffer—but depleting at an astonishing pace. Since the outbreak of the conflict, global visible inventories have declined by nearly 265 million barrels—equivalent to roughly 6 mbd—partially absorbing the supply shock and preventing oil prices from surging more sharply. Given the limited visibility into refined product inventories, the actual inventory drawdown is likely even greater. Conclusion points to demand: The only plausible explanation for falling prices. Amid tightening supply and declining inventories, spot prices should logically rise. JPMorgan argues that the sole mechanism capable of explaining the price decline is “weak demand.” Last week’s clearest signal was the emergence of negative refining margins in Europe—indicating that demand destruction has already taken root there. European refining margins turn negative: The strongest signal of demand destruction The report states that European refiners are facing severe economic pressure: surging crude oil costs can no longer be passed through to product prices. Specifically: ・ Northwest Europe light-sweet hydroskimming margins fell from ~$9/bbl in mid-March to below zero by end-March, and further slid to −$15.3/bbl for the week ending April 12. ・ Cracking margins similarly deteriorated sharply, dropping to $0.8/bbl on April 12—about $26/bbl lower than their mid-March peak. JPMorgan notes that such margin compression—or outright elimination—is especially devastating for simple hydroskimming refineries, which lack the capability to convert heavy fractions into high-value products and produce ~35% low-value residue. Unable to offset rising crude costs, the current margin environment in Europe provides ample justification for reducing operating rates. Italy’s Sarroch refinery has already extended its scheduled maintenance due to crude supply issues. ・ Medium-sour cracking margins have also turned negative. The report emphasizes that these data collectively indicate European refiners can no longer pass through soaring crude costs to refined product prices. Rising crude prices are squeezing—and even erasing—refining profits, severely undermining refinery economics and triggering risks of production cuts. JPMorgan: Inventories to approach operational minimums by around May 15 Based on the above analysis, JPMorgan issued the following key forward-looking projections: First, the bank significantly raised its forecast for refinery output cuts: April: Expected refinery cuts of 2.9 mbd—substantially up from last week’s forecast of 2.0 mbd.

Chemical Industry Update: Europe’s ‘Golden Age’ of refining and petrochemicals ends amid a wave of shutdowns; China, India, and the Middle East drive global restructuring of the refining & petrochemical landscape.

AkzoNobel will progressively shut down three of its production facilities in Europe and Africa between 2024 and May 2025: Groeneveld-Amsterdam in the Netherlands, Cork in Ireland, and Lusaka in Zambia. TotalEnergies announced in April 2025 that it will permanently close an aging cracker unit at its Antwerp refining and petrochemical complex in Belgium by the end of 2027. The unit has an annual capacity of 550,000 tons of ethylene and 230,000 tons of propylene. With the end of Europe’s “golden age” of refining, the wave of shutdowns reflects not merely corporate decisions but the convergence of broader structural forces: the disruptive impact of new-energy vehicles; rising competition from emerging capacities in Africa; mounting pressure from surging EU carbon prices and escalating carbon costs; and multifaceted challenges confronting North American shale gas producers—including production constraints, volatile international oil prices, and shifting market demand. This shutdown wave is thus a concentrated manifestation of global energy realignment, industrial policy shifts, and geopolitical transformation. This is not simply a relocation of capacity—it represents a fundamental restructuring of the global chemical value chain. China, leveraging its vast domestic market and fully integrated industrial system, is leading the industry toward higher-end, smarter, and greener development. India, through rapid capacity expansion and industrial upgrading, aims to become a regional refining and petrochemical hub. Meanwhile, the Middle East—capitalizing on its unparalleled resource advantages—is extending downstream to transform “black gold” into higher-value chemical products, thereby advancing its economic diversification. These three forces collectively propel the global refining and petrochemical center of gravity steadily eastward, reshaping the industry’s future landscape. China—World’s largest refining capacity, advancing toward high-end and green development China has become the world’s largest producer and consumer of petroleum refining and petrochemicals. Its industry is transitioning from “scale-driven expansion” to a new phase of “quality-driven advancement.” Backed by a massive domestic market, a complete industrial chain, and sustained large-scale investment, China’s share of global chemical capacity continues to rise—evolving from a “large” player to a “strong” one, with continuous breakthroughs in high-end materials. Statistics show that China’s refining capacity has stabilized at approximately 980 million tonnes annually (with variations depending on measurement methodology), ranking first globally. Domestic refining capital expenditure has markedly slowed, shifting from market-share growth to high-quality development. Concurrently, efforts to “reduce fuel, increase chemicals” and to lighten feedstock composition are progressing steadily—enhancing refinery flexibility and cost competitiveness, further strengthening China’s overall global competitiveness and laying a solid foundation for the next industry cycle. Future trends: • High-end and fine chemical development: The industry is shifting from bulk fuel oil production toward high-value-added chemical products and advanced materials. Large integrated refining-and-chemical projects (e.g., Zhejiang Petrochemical, Hengli Petrochemical) deeply integrate refining and chemical operations to maximize production of foundational chemicals such as ethylene and propylene. • Green and low-carbon transition: Under the “dual carbon” goals (carbon peak and carbon neutrality), energy conservation and emissions reduction have become core priorities. National policies now mandate improved energy efficiency and reduced carbon emissions across the refining sector. Enterprises are increasing R&D and deployment of energy-saving and decarbonization technologies, and exploring circular economy models. • Intelligent upgrading: Artificial intelligence, big data, and other digital technologies will be widely applied throughout production processes—enabling automation, digitization, and intelligent management to enhance efficiency, reduce costs, and optimize decision-making. India—Refining capacity to exceed 300 million tonnes, building a regional hub India’s refinery capacity has expanded rapidly over the past four decades—from 557 thousand barrels per day (kbpd) to 4,970 kbpd. Indian refinery demand has remained robust: except for the global public health crisis in 2020, India has maintained refinery utilization rates above 100% for 20 consecutive years—and achieved a record-high utilization rate in 2023. Consequently, most major international energy agencies—including the U.S. Energy Information Administration (EIA) and the International Energy Agency (IEA)—project India to be among the primary drivers of global crude oil consumption and refining demand growth over the medium term.

Italy to Convene Oil Refiners to Boost Fuel Output

16 hours ago

The Italian government will meet major oil refiners next month to increase domestic fuel production amid rising prices and supply shocks. Key players include Eni and Saras, while France advocates relaxing EU fuel quality rules to boost capacity by 20%.

bloomberg

2026-09-25

Italy seeks refiners' help to boost domestic fuel production in bid to ease prices

2026-09-25

Italy to Convene Oil Refiners to Boost Fuel Output

Italy to Convene Oil Refiners to Boost Fuel Output

FAQ