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Geopolitics, energy volatility, and persistent oversupply are reshaping the global chemical industry as 2025 draws to a close. Victoria Meyer sits down with Kurt Barrow and Andrew Neale from S&P Global to address the forces driving today’s market dynamics, the impact of government policies, and the shifting landscape heading into 2026. They break down how new sanctions, tariffs, and energy transition policies are influencing everything from oil prices and supply chains to chemical production strategies worldwide.
The episode explores regional strengths and vulnerabilities, with North America, the Middle East, and China taking leading roles amid rationalization and capacity closures in Europe and South Korea. Kurt Barrow and Andrew Neale share insights on how chemical producers are responding to cost shifts, supply chain resets, and evolving consumer demand. The conversation also previewed the upcoming World Petrochemical Conference and CERAWeek, emphasizing the need for industry leaders to stay agile in response to accelerated change, emerging technologies, and global market imbalances.
Victoria, Kurt, and Andrew discuss the following this week:
- Why government action, oversupply, and shifting demand are redefining 2025 in the chemical markets.
- How new sanctions, oil movements, and policy shifts impact feedstocks and chemical production.
- Real-world examples of how canal disruptions, freight rate swings, and tariffs are reshaping global sourcing.
- Regional winners and losers as energy prices, assets, and investments shift across Europe, China, and the US.
- Key strategies for chemical leaders navigating consolidation, energy transition, and market shifts ahead.
Killer Quote: “We’ve gone from that globalization to regionalization—that almost helps some of your high cost players very short term…that’s a very near term. How long that lasts if we have another round of tariff movements—European, and we will, but European, I don’t know what it is, but we will in Q2.“ —Andrew Neale
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Energy and Chemical Industry Outlook for 2026 with S&P Global
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Energy and Chemical Industry Outlook for 2026 with S&P Global
Introduction
The chemical industry continues to face a landscape shaped by volatility, government influence, and evolving global dynamics. In the latest episode of The Chemical Show, host Victoria Meyer connects with S&P Global’s Kurt Barrow and Andrew Neale to dig into market trends, energy fundamentals, supply chain issues, and the outlook for 2026. Their conversation offers timely insights into how chemical leaders should be navigating a world marked by oversupply, policy shifts, and long-term structural change.
Energy and Oil: Volatility, Oversupply, and Geopolitics
Starting the discussion, Kurt Barrow highlighted two key themes for 2025—dynamics and government influence. Five years removed from the COVID upheaval, the energy markets have seen supply chains recover and face new disruptions from geopolitical events like the Russian invasion of Ukraine. The result? Ongoing volatility, yet surprising resiliency.
Recent years brought rapid restarts, complex sanctions, and shifting global flows. Kurt Barrow pointed out new, stricter US sanctions on Russian companies that could lock out buyers from financial systems—significantly inflaming market dynamics. Despite oversupply and the prospect of lower prices, uncertainties remain. OPEC+ decisions, enforcement of sanctions, and stockpiling activity—especially in China—all have the potential to reshape the market quickly.
Feedstock costs continue to be impacted by these oil trends. Lower crude prices set the stage for cheaper naphtha, but natural gas tells a different story. US LNG buildouts are expected to drive gas prices higher, narrowing the cost advantage for gas-based crackers. As Kurt Barrow noted, this shift could play directly into chemical production economics, with integrated players possibly holding their ground.
Chemicals: Managing Oversupply and Regional Pressures
Andrew Neale brought focus to the oversupply that has been a defining feature since investments made during the profitable pre-pandemic period began to come online. China’s delayed but dramatic post-COVID recovery created a bullwhip effect, adding further distortion. With millions of tons of new capacity—primarily from China, Southeast Asia, and the Middle East—markets remain overstocked.
For producers in 2025, this means working through uncertainty and lost growth. Container freight rates spiked in mid-year before plummeting, marking strong supply chain adjustments. Tariffs and policy disruptions are driving not only real costs but also behavioral changes, with many companies pre-emptively pricing in future tariffs.
Andrew Neale explained that while core consumer demand persists, the big-ticket, discretionary purchases that drive significant volumes—like autos and housing—are lagging. This shift is dampening chemical growth, reinforcing the need for resilience and adaptability as companies work through the current cycle.
Europe’s Ongoing Adjustment: Rationalization and Competitiveness
A recurring theme is the struggle for European chemical producers. High energy costs and policy constraints have led to strategic rationalization, with global majors trimming their European assets. As competition from US and Middle Eastern producers increases—fueled by lower-cost feedstocks—Europe’s export-oriented chemical industry faces hard choices.
Both Andrew Neale and Kurt Barrow recognize Europe’s slow, consensus-driven policy changes may hinder its agility. Meanwhile, European companies are shifting supply strategies, seeking to maintain customer base while sourcing product from lower-cost joint ventures abroad.
Structural Shifts, Energy Transition, and the Path to 2026
Industry leaders are grappling with ongoing structural changes. Regionalization is on the rise, with supply chains reconfigured amid trade barriers and tariffs. New capacity is being added in China and elsewhere, while rationalizations accelerate in Europe and Korea. Consolidation—through joint ventures and asset rationalization—has become common as companies seek stability.
Energy transition remains in motion, though quietly. Electrification trends grow, especially in China’s vehicle sector, while global peak oil demand appears likely around 2030–2035. This shift will impact chemical feedstocks, as refinery output changes and molecules like naphtha become relatively more expensive.
Preparing for 2026: Clarity, Steady Demand, and Industry Events
Looking ahead, Kurt Barrow expects clearer market signals on oversupply, pricing, and policy direction in 2026. Andrew Neale forecasts steady demand, not a strong bounce-back, with some capacity relief in certain product chains and further asset rationalizations. Both urge leaders to track geopolitical developments, supply chain regionalization, and energy transition trends closely.
Finally, the return of S&P Global’s World Petrochemical Conference and CERAWeek in March promises a deep dive into these topics. The chemical community will gather for strategic outlooks, market sessions, and networking—setting the stage for industry adaptation in the year ahead.
Chemical leaders face a multi-layered challenge in 2025 and beyond. The key: keep informed, remain flexible, and prioritize strategic choices as the global market continues to evolve.
About Kurt and Andrew:
Kurt Barrow, Senior Vice President and Head of Oil, Fuel and Chemicals Research, S&P Commodity Insights
Kurt is responsible for global team of over 300 analysts that create the S&P Commodity Insight’s House View, Alternative View (AltView) and scenario forecasts. Kurt advises on the company’s Energy Scenarios and co-leads the joint mobility research services with the S&P Mobility division.
Kurt delivers industry keynote talks and executive/board-level presentations on markets, policy, industry trends, energy/material transitions and integration strategies. Kurt is actively involved in the team’s research, overseeing both expert-based analysis and analytical modeling of market and industry fundamentals.
Formerly a Vice President with Purvin & Gertz, Kurt’s expertise includes refining economics, business strategy, commercial analysis, crude oil and refined product forecasting, and policy scenario assessments. Kurt began his career as an engineer at the Exxon Baytown Refinery and holds a BS in Mechanical Engineering from Kansas State University and an MBA from the University of Houston.
Andrew Neale, Vice President – Chemicals, Derivatives, Plastics & Materials, S&P Commodity Insights
Andrew currently serves as Vice President – Chemicals, Derivatives, Plastics and Materials. He joined S&P Global in 2022 as EMEA Lead for S&P Global Chemical Insights, whilst also heading up the Global Aromatics and Fibers group.
Andrew has spent much of the past decade in the Middle East, most recently working for QatarEnergy where he was responsible for strategy development for the marketing and sales of Qatar’s exports of fuels, petrochemical feedstocks, petrochemicals and fertilizers. Volumes doubled through his tenure, as the department added more products and diversified into metals. Prior to this, he was a Consulting Director at IHS Markit, leading single client assignments in the Middle East and India. These ranged from executing due diligence, merger support, country master-planning, cost benchmarking and value chain strategy for a diverse range of petrochemicals.
Andrew began his career with CMAI (later acquired by IHS Markit) in London where he initially worked as part of the Consulting team before moving to forecast European aromatics markets. Andrew has an MSc in Engineering and Management from the University of Exeter and a BEng in Chemical Engineering from UMIST.