Mastering the Commodities Markets

Crude Oil Refining

Producers also became keen to have more of a say at the consumer end of the market and in the refining sector or ‘downstream’ part of the business. Saudi Aramco led the way by adding refining capacity within its own country. This was, firstly, to meet its own growing energy demand and, secondly, to export refined products rather than simply the crude oil, thus capturing the ‘refiner’s margin’ too. This increased refining capacity has been mirrored all around the Middle East.

The previous cycle of low oil prices and poor refining margins – the difference between the cost of purchasing, shipping and refining crude oil and the resultant prices of selling those refined products – had led to a period of chronic underinvestment in ...