Refining Fortunes Split: APAC Oil Margins Chart Diverging Paths

Fitch Ratings has projected a mixed recovery outlook for Asia-Pacific’s oil refining and marketing margins, with regional disparities set to widen through 2027. While some markets show signs of resilience, others face headwinds from oversupply, weak demand, and structural shifts in energy consumption.  

Key highlights  

- Refining margins across APAC are expected to gradually return to mid-cycle levels by 2027, but the pace will vary based on local supply-demand dynamics and vertical integration  
- Indian refiners like Indian Oil Corporation, Bharat Petroleum, and Hindustan Petroleum are poised for stronger EBITDA margins due to high refinery utilization and stable retail fuel prices  
- Vietnam and Indonesia may lag behind due to lower refinery complexity, though Indonesia’s KPI could benefit from the Balikpapan expansion expected in November 2025  
- China’s recovery is projected to be the slowest, with PetroChina and Sinopec facing margin pressure from domestic oversupply and declining fuel demand due to electric vehicle adoption  
- Fitch estimates petroleum product demand to grow by mid-single digits in Vietnam, low- to mid-single digits in India, and low-single digits in Indonesia, while contracting in China  
- Marketing margins remain vulnerable to policy shifts, such as potential excise duty hikes or retail price controls, though these are not part of Fitch’s base case  
- Falling crude prices may support margins in markets where refined product prices remain sticky, offering a cushion against volatility  

The report underscores the importance of strategic integration and market-specific agility as APAC refiners navigate a complex and uneven recovery landscape.  

Sources: Fitch Ratings, Bloomberg, The Tribune India