5 top takeaways from our APPEC 2025 briefings

The annual Asia Pacific Petroleum Conference (APPEC) provided a welcome opportunity to reflect on the crucial themes affecting Asian oil and refining markets in 2025 and consider what’s ahead in 2026. 

On Wednesday 10 September our experts presented at APPEC 2025, sharing their insights into the outlook for Asian oil and refining markets within a global context. Complete the form to download our presentation from the event, or read on for five key takeaways from the briefings. 

1. Slowing growth and weaker fundamentals suggest lower prices in 2026 and 2027 

Year-on-year growth in global liquids demand faltered to only 0.3 million barrels per day (b/d) in Q2 2025, with annual demand growth of 0.85 million b/d projected for 2025, with lower levels projected for 2026. Petrochemical feedstocks (LPG and naphtha) account for half of this demand growth in 2025, with the share of demand growth set to increase. 

Non-OPEC supply growth outpaces demand growth for 2025 and 2026, with OPEC+ increasing supplies. As a result, our base case sees oversupply through 2026 and H1 2027 putting sustained downward pressure on prices, before declining US Lower 48 onshore production and weak non-OPEC growth provide support.  

There could be upside price risk if US secondary tariffs on Russia lead to a sharp drop in Russian crude imports to China and India and associated drop in Russian production. On the flipside, further tariff escalation or the return of more OPEC+ supply than expected could push prices even lower.  

2. Crude grades will matter to Asian refineries amid rising dependence on imports 

Asia is becoming more dependent on oil imports, a trend that will continue. Taking Indonesia as an example, the country’s crude imports is set to increase with rising crude demand and sharply declining domestic crude production. . Rising crude demand in Asia will lead to higher imports. Our analysis suggests that these imports will have to come from new long-haul sources to meet the quality requirements for Asian refiners.   

Both for crude producers and traders, it is important to understand the “value” of crude into different refineries.  “Value” of crude into a refinery depends upon refinery configuration, base crude slate, and refined products prices. This “value” of crude into a refinery must then be compared to “price” of crude available from the market. “Price” of crude depends upon various market factors such as geopolitics, crude competition, freight market, OPEC+ policy. Our PetroPlan simulation product provides a quick and easy tool for crude valuation, with around 550 refinery models available for crude trading analytics and refinery optimisation.  

3. Refined product flows are changing rapidly due to structural shortages in key Pacific markets  

The Pacific region is economically and physically vast, accounting for a substantial proportion of global GDP. As well as China, India, Japan, South Korea and Indonesia, the Pacific refined product market includes the US West Coast (California alone has the world’s fourth largest economy, with a GDP of US$4.34 trillion in 2024). 

By modelling demand and comparing it against refinery outputs modelled using PetroPlan, we can make precise judgements about supply/demand imbalances in local markets. Two large, wealthy Pacific economies, in the form of Japan and California, both have structural shortages of refined products and are therefore heavily reliant on imports — for example, we calculate that California will be short 134,000 barrel per day of gasoline by the end of 2025 — rising to 206,000 by the end of Q1 2026.  

Both California and Japan have the pricing power to bid products away from other markets in the region, changing Pacific refined product flows at an accelerated rate. Meanwhile, other markets, such as Washington State in the US, are usually internally balanced but have very little margin for error, so must import products when a refinery goes offline. These supply/demand imbalances create real-time trading opportunities.  

4. Refining margins may be squeezed again in 2026 after a short boost from heavy maintenance 

Asian refiners ramped up their operations in Q3 2025 to take advantage of strong refining margins. Heavy refinery maintenance should provide a further boost to margins in Q4. However, looking further ahead, lingering supply fears ease; creating the potential for refinery margins to become squeezed once again in 2026. 

In the short term, planned maintenance at Nigeria’s massive Dangote refinery as well as at Asian refineries, along with the closure of the Phillips 66 in Los Angeles, will support Asian refinery gasoline cracks in Q4 2025. Meanwhile, diesel supplies are set to tighten in Q4, due to falling Russian crude runs with European inventories remaining persistently low. The story is slightly different for marine fuel, with high sulphur fuel oil (HFSO) cracks impacted by the end of peak demand season in the Middle East and the return of OPEC+ barrels.  

5. Petrochemical markets are increasingly influencing refining operations 

We expect petrochemicals to play an increasingly important role in future Asian refinery operations, with healthy demand driving investment in specialised units for petrochemical feedstock production. 

Using our Refinery Evaluation Model we compared the competitiveness of Asian refineries to find out whether petrochemical integration is adding value. Our assessment is based on the net cash margin (NCM) of facilities in 2024, defined as refinery gross margin, less non-feedstock variable costs, less fixed costs. 

Integrated sites outperformed non-integrated sites to dominate the rankings, with top performers capturing value both from cheap Russian crudes and more robust petrochemical margins. Operational flexibility was a key differentiator, with high-performing facilities focusing on petrochemical yields when refined products cracks were weaker.  

Wood Mackenzie’s Commodity Trading Analytics provide real-time monitoring and advanced analysis to help identify opportunities and manage risk in oil and refined products markets. Get in touch to find out more or request a demo — and don’t forget to fill in the form at the top of the page to access the briefing presentation, which contains a range of charts and data covering the above topics in more detail.