Sinopec H1 profit up 19.3% despite Middle East conflict, weak fuel demand

China's Sinopec, the world's largest refiner, reported a 19.3% year-on-year increase in net profit for the first half of 2026, reaching 25.63 billion yuan ($3.81 billion) under Chinese accounting standards. The result came despite significant headwinds, including the ongoing Middle East conflict and softening domestic fuel demand.

In a separate filing, the company disclosed it had set aside 16 billion yuan in asset impairment provisions due to volatility in oil and fuel prices during the period. Sinopec relies on the Middle East for half of its crude oil needs, leaving it exposed to supply disruptions in the Strait of Hormuz, which has remained largely closed since March.

Despite these challenges, the company's refining segment saw operating profit surge 381.5%. Sinopec attributed this to diversifying crude oil sourcing beyond the Middle East, carefully timing purchases, and optimising its product mix based on profitability. Its refining margin rose 44.1% year-on-year to 453 yuan per metric ton.

Crude throughput fell 5.6% to 113.31 million metric tons (4.57 million barrels per day) in the first half. The company noted that domestic fuel price hikes lagged the surge in crude costs, and the chemicals segment remained loss-making, though losses narrowed by around 4 billion yuan to just over 200 million yuan.

Ethylene output dropped 15.5% to 6.4 million tons amid industry over-capacity and private-sector competition. Sinopec projects crude throughput of 113 million metric tons for the second half, roughly flat compared with the first six months.