After 5 months, ExxonMobil is once again the world’s largest company by market capitalisation. PetroChina had overtaken it last November, but has since lost half its value in China’s stock market decline. Today, PC is worth $453bn, versus EM’s $455bn.
China’s stock market has lost 25% so far this year. But PC has been particularly badly hit by its inability to raise product prices to compensate for higher oil costs. Its refineries are losing $54m a week as a result. With inflation at a record high of 8.7%, the government is determined to insulate Chinese consumers from the impact of $100/bbl oil.
In turn, this means demand is not being restrained by higher market prices, with all oil product prices frozen last January. The same is true in many other emerging countries, and in the OPEC countries. This means the West is facing the bulk of the adjustment process, which is bad news for those petchem producers without access to advantaged feedstocks.