NOC-on effect: How National Oil Companies are changing the face of the industry

A new era of game changing competition in the refining industry is upon us. National Oil Companies (NOCs) are increasingly flexing their commercial muscles in refined oil product markets. How can oil companies future-proof their current investments and quickly adjust to this new reality? Read what our Chief Economists have to say in our market insight viewpoint.

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Written by: Stephen George and Mark Routt

Recent oil refining capacity additions in Saudi Arabia and the UAE herald a new era of game-changing competition as National Oil Companies (NOCs) flex their commercial muscles in refined product markets. The next few years will see new capacity start-ups in Kuwait, Oman, and Saudi Arabia. As the Middle East moves to even greater product surpluses, differences in inter-regional margins will narrow and Asian and European competition will intensify.

KBC expects this shift to be repeated elsewhere as other NOCs become more commercially focused and export-oriented. All oil companies looking to future-proof their current investments will need to adjust to a new reality where NOCs will forcibly enter markets traditionally dominated by International Oil Companies (IOCs) and traders. Smaller independent oil refiners will need to become more nimble, take advantage of a wider slate of opportunity crudes, and develop product flexibility that includes new markets only available through trade and enhanced commercial operations. As new forces emerge, all oil refiners need to plan their response to the changing shape of more global competition.

Find out more in our market insight viewpoint 'NOC-on Effect: Re-invented National Oil Companies will emerge as formidable refining competitors during the 2020s' written by Chief Economists Stephen George and Mark Routt.

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