Oil & Gas – Sector Update – Crack spreads to remain above long-term averages

We hosted a roadshow with oil market expert Mukesh Sahdev, Founder, CEO and Chief Oil Analyst of Xanalyst, Ex-Rystad and Ex-Shell, having more than 30 years of experience across the oil value chain. The discussion focused on the ongoing crisis in the global oil and gas market. The global oil market is facing an increasingly complex supply-demand environment, with a sharper crude supply glut expected in 2027, coupled with persistent geopolitical disruption. As a result, crude prices are expected to remain near US$90–100/bbl. Refining operations are expected to recover faster than LNG infrastructure, although diesel cracks may remain above historical levels of US$18-20/bbl due to elevated freight costs and regional supply disruptions. Diesel cracks are expected to remain elevated for the next 12–18 months, supported by the demand from mining, agriculture, AI infrastructure, space applications and inventory accumulation. LNG markets remain constrained by prolonged repair timelines for Qatar's damaged cryogenic infrastructure, competition for specialized engineering resources and rising power demand from AI data centers and satellite launches. China's continued LNG consumption growth and Australia's export constraints provide additional support. Meanwhile, geopolitical competition between the US and China over energy, minerals and strategic influence is accelerating investment in Latin America, which is emerging as a major oil, gas and mining destination.