Crude Oil and Refining: Quarter one performance

The opening months of 2025 saw a relatively small change in average crude oil price but this continued to mask considerable short-term volatility as sentiment digested latest news from markets.  Brent crude averaged US$77.7/bbl through January and February, up from US$2/bbl on the closing quarter of 2024.  Range of daily prices widened and explored a range similar to that in the second half of 2024.  The changing administration in the United States exposed markets to rapidly changing policy influencing markets; notably ramped up sanctions against Russia, Iran and Venezuela, a renewed focus on fossil fuel production, and the imposition of tariffs against a range of key markets.  Underlying macro-economic and geopolitical worries, cold weather in the northern hemisphere, and expectations of unwinding of OPEC+ voluntary supply cuts also had an effect on prices. 

Brent crude oil prices opened the year at around US$74/bbl and rose sharply to peak above US$81/bbl in mid-January.  Extension of sanctions against Russian oil exports by the departing Biden administration revived prices towards previous highs posted in August 2024.  Various Russian companies and the “shadow fleet” of tankers being used to circumvent existing sanctions were targeted.  Much of the northern hemisphere was affected by a cold snap that boosted fuel and energy demand.  Crude production and refinery operations in the United States were also interrupted by adverse weather.  Crude exports were from Libya were curtailed by protests at key ports and pipeline maintenance disrupted exports from Nigeria. 

Brent dropped significantly by the end of January and promptly surrendered gains made in the first half of the month.  The new U.S. administration trumpeted intention to impose wide-ranging trade barriers were taken as a risk to demand.  Removal of barriers to crude exploration and production in support of the new President’s “drill, baby, drill” agenda suggested contrasting lengthening supply.  Brent prices opened February at US$75/bbl and were range bound between US$74/bbl and US$77/bbl for much of the month. 

Announcement of extended sanctions against Venezuela and Iran hastened the downturn of prices into March as both countries sought to maximise production in the run-up to their implantation.  New sanctions included cancellation of Chevron’s license to operate in or export from Venezuela and a renewed “maximum pressure” against entities and vessels deemed to be supporting Iran’s circumvention of existing sanctions.  Longer-term, sanctions on Iran and Russia have had limited impact on actual export volumes.  Rising output from Kazakhstan on ramping up of the Tengiz expansion project, and reduced U.S. refinery runs due to maintenance outages added to negative price pressure.  The OPEC+ grouping’s confirmation in early March of intention to wind down voluntary supply cuts from April capped prices at their lowest since mid-September. 

Cost of petrochemical feedstocks sourced from the refinery largely followed turbulent crude oil prices, with a peak in January promptly reversed in February.  Seasonal heating demand coupled with disruption to refinery operations in the United States due to maintenance and adverse weather firmed refinery margins.  Global gas prices lagged the downturn in crude oil prices through February. 

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Quarterly Business Analysis: Petrochemicals, Polymers and C1 Chemicals - Q4 2024

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, 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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