Persistent Supply Risks Could Weigh on Sinopec’s Refining Margins

China Petroleum & Chemical, better known as Sinopec, is the listed arm of one of China's two integrated oil majors and one of Asia's largest refiners and chemical companies in terms of revenue. Owing in part to historical legacy, Sinopec’s revenue and assets are more heavily weighted toward its downstream activities, and the company relies on external sources of oil to meet its refining and processing needs. As a result, Sinopec’s earnings are generally less sensitive to oil price swings than those of its peer, PetroChina, and so it benefits less in a rising oil price environment but is also more stable when prices fall.