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GPCA 2025: Feedstock economics reshape Middle East petrochemicals
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Report summary
The Middle East petrochemical industry is navigating a challenging downcycle as feedstock economics reshape investment strategies. Weak crude oil prices, oversupplied markets, and compressed margins are forcing heightened scrutiny on new projects, yet gas-based investments continue to dominate. All upcoming ethylene capacity additions are ethane/NGL-based, enabled by Jafurah basin production in Saudi Arabia, while naphtha cracking remains economically uncompetitive. Despite headwinds, international players maintain their presence in the Middle East with strategic patience. Multiple refinery-to-chemicals projects are advancing toward operations by 2030-2035 to capture more petrochemical value. Government localisation initiatives drive downstream integration, balancing mandates with commercial viability. Wood Mackenzie analysis shows industry recovery by 2030, with demand growth and rationalisation restoring positive margins for most producers.
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