Chinese oil refiner Sinopec’s half-year profit grows 19.3% despite Iran war, falling demand
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Sinopec’s net profit over the January-June period stood at 25.63 billion yuan (S$4.84 billion).
PHOTO: REUTERS
- Sinopec’s net profit rose 19.3% to 25.63 billion yuan in H1 2026 despite Middle East conflict and falling domestic fuel demand.
- The company wrote down 16 billion yuan in inventories and faced reduced crude processing by 5.6%, but refining margins increased by 44.1%.
- Sinopec improved profits by diversifying crude sources, managing purchases, and optimising products, while its chemicals segment remained loss-making but with narrower losses.
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BEIJING - China’s Sinopec reported an unexpected 19.3 per cent year-on-year increase in net profit for the first half of 2026, despite a litany of issues, including the Middle East conflict and falling demand for fuel domestically.
But it said it had to write down its inventories by 16 billion yuan (S$3 billion).
Net profit over the January-June period stood at 25.63 billion yuan under Chinese accounting standards, versus the 21.48 billion yuan a year earlier, Sinopec said in a filing at the Shanghai stock exchange on Aug 23.
In a separate filing, the company said it set aside provisions for asset impairment of 16 billion yuan as a result of the volatility in oil and fuel prices in the first six months of this year.
Sinopec, the world’s biggest refiner, relies on the Middle East for half of its crude oil needs, making it vulnerable to the worst supply crisis in history as the Strait of Hormuz – through which it usually imports large quantities of oil – has remained largely closed since March.
It also processed 5.6 per cent less crude oil between January and June versus the same year-ago period, at 113.31 million tonnes, or 4.57 million barrels per day (bpd), according to the filing.
The company said its refining margin was up 44.1 per cent on the year in the first half of 2026 – up 139 yuan per tonne to 453 yuan per tonne – a surprising jump, given that domestic fuel price hikes lagged the surges in crude oil cost.
Its refining segment reported a 381.5 per cent growth in operating profit by “broadening crude oil sourcing outside the Middle East, closely managing the timing of purchases in line with market conditions, and optimising its product mix based on product profitability”, the filing showed.
China has drastically cut oil imports since the war began in March, freeing up barrels for others and keeping a lid on global prices.
Sinopec’s result is all the more surprising, given how exposed it was to the strait and the way in which Beijing has forced the refiner, and others like it, to absorb the oil price shock by limiting their ability to pass higher oil prices through to fuel consumers.
Conflict in the Middle East caused “sharp volatility in international crude oil prices and a substantial increase in imported crude procurement costs”, while the domestic refined product and chemicals markets remained weak, the management stated in the filing.
But the company said it “closely monitored changing conditions, dynamically adjusted production and operating arrangements, and effectively responded to unexpected shocks and challenges on multiple fronts”.
The chemicals segment remained loss-making, recording an operating loss of more than 200 million yuan, but losses narrowed sharply by around four billion yuan, it said.
Output of ethylene, a key building block for petrochemicals, sank 15.5 per cent on the year to 6.4 million tonnes in the first half, as the company faced industry overcapacity and competition from the private sector.
Sinopec projects crude throughput for July to December at 113 million tonnes, roughly flat versus the amount processed in the first half. Reuters
