The Refining Supercycle Is Coming to an End

The refining industry is witnessing the end of the supercycle of huge profits and record margins that began with the post-pandemic surge in demand and war- and sanctions-related supply disruptions. This year, weaker Chinese economy and fuel consumption, a wave of new refining capacity in the Middle East and Africa, and underwhelming demand in developed economies have depressed refining margins to multi-year lows.

Profits at U.S. refiners have been much lower this year as refining margins slumped from record highs in the previous two years. The…