BOSTON—September 15, 2026— Bain & Company today released a new resilience playbook for downstream oil and gas players highlighting four capabilities to help refiners navigate the current challenging operating environment. Following through could raise profit margins by $2 - $3 a barrel, setting the difference between winners and losers.

“The resilient downstream company of the future won't just survive disruption; it needs to be built to thrive through it. That means asset-level cost competitiveness, commercial discipline around price volatility, smart low-carbon investment, and the technical talent to execute. AI accelerates every single one of those imperatives,” said Wren Kabir, a Houston-based partner in Bain & Company’s Energy & Natural Resources practice.

“Following these four imperatives could increase a refiner’s profit margin by at least $2 to $3 per barrel. At a 150,000 barrel-per-day site, that’s about $110 million to $165 million a year.”

Three macroeconomic shifts have intensified the pressures on refiners and marketers. The rules-based trading order is fracturing, capital is no longer cheap or abundant, and labor supply is shrinking especially in capital-intensive sectors in advanced economies.

These shifts have in turn resulted in six challenges faced by the refining industry today.

1. Demand growth slows down to 0.5% annually through 2030, and the product mix diverges. Naphtha, LPG, and jet fuel are expected to grow slightly above 2% per year due to demand for petrochemicals and air travel. Refiners without the right mix or configuration flexibility will watch spreads compress around them.

 2. Competitive boundaries expand eastward as cost efficiency takes centerstage. Among a sample of 16 large refiners representing a quarter of global supply, more than 70% announced major cost reduction programs in the past 12 months. The gap between the regions with the highest and lowest profit margins is widening and less-advantaged refineries in the west face closures.

3. Trade flows disperse and get riskier. The US and Middle East, already the largest net exporters of oil products, are expected to grow their exports the fastest through 2030, while Europe, Latin America, and Africa become even more dependent on imports. However, tariffs, geopolitics, logistical constraints, and regional supply preferences add new basis risk to every cargo.

4. Price volatility becomes structural, and trading captures the upside. Crack spread volatility has increased four-fold in recent years, both in frequency and amplitude. This reflects capacity rationalization, rerouted trade flows, and geopolitical shocks. As a result, trading activity has roughly doubled over the past decade, while trading profit margins widened by 20% to 30%.

5. Low-carbon fuel demand is real; returns aren’t showing. While investment in low-carbon fuels is rising, project economics remain difficult, and policy is diverging. Sustainable aviation fuel (SAF) still costs two to five times more than conventional jet fuel, and today’s supply of waste oils and other feedstocks cover less than 20% of projected 2030 demand. EU SAF blending mandates rise toward 70% by 2050 while US SAF credits have fallen about 40%.

6. The workforce retires faster than it replenishes. Experienced operators retire faster than replacements can be trained, and the inflow of entry-level workers has slowed. Meanwhile, AI-enabled process optimization, data-driven trading, low-carbon engineering, and integrated commercial operations require skills that sit outside the traditional refinery profile.

Bain proposes four keys to help refiners stay on top of the game:

(1) Redefine each asset’s full potential using AI. The leading companies will go beyond standard industry benchmarking for target setting, instead reimagining each site’s true operational potential. A clean-slate approach—line-led, anchored in the company’s own operational data, with AI finding patterns rather than confirming a hypothesis—could boost site profit margins by $1-$1.50 per barrel.

(2) Maximize trading value creation with an agile, integrated operating model. A well-coordinated trading, supply, and production team could create additional gains of $0.50 to $1 per barrel. For refiners with commercial flexibility, the fix is more integrated planning tied to strategy, with a single source of truth and clear cross-functional accountability. AI can help facilitate and strengthen this link. As the number of opportunities increases and pace accelerates, production and maintenance will also need to adjust to different rhythms and standards to ensure availability while maintaining integrity.

For refiners with an in-house trading organization, a growing desk without matching governance threatens the balance sheet. The most successful companies will define their risk tolerance and set decision rights before they build or expand the book. Partnerships between a refiner and trading house could be a viable alternative, matching asset knowledge with global trading expertise, risk management, and market intelligence.

(3) Mitigate risk in low-carbon business models. The most effective companies apply rigorous investment criteria before committing capital. They prioritize positions with secured feedstock, contracted offtake, and conservative capex to build competitive moats.

(4) Build the talent strategically. In most refining organizations, a small group of operators and engineers generate a disproportionate share of the value. Companies should identify that group of key technical talent and develop it deliberately. Use AI to absorb routine work and help offset labor shortages, while training the existing workforce in digital, analytics, and energy transition capabilities. Leading companies will replace their typical year-by-year approach to workforce planning with a five-to-10-year view of the evolving talent and skills needed to win in this new era.

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Media contacts: 

Ann Lee (Singapore) — ann.lee@bain.com

Gary Duncan (London) — gary.duncan@bain.com

Dan Pinkney (Boston) — dan.pinkney@bain.com

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