Upstream or Downstream: Which Side Wins?

I was reading about the oil and gas sector but couldn’t understand the relationship between upstream and downstream companies and how changes in crude oil prices affect them. Can you explain? - Ritesh Parkeria [EasyDNNnews:PaidContentStart]

Editor Responds: Upstream and downstream companies are affected very differently by changes in crude oil prices because they operate at different stages of the oil value chain. Upstream companies explore and produce crude oil. When crude prices rise, they usually benefit because they can sell oil at higher prices while production costs remain relatively stable, leading to stronger revenues and profits. However, falling crude prices reduce their earnings

Downstream companies, on the other hand, refine crude oil into products such as petrol, diesel and LPG before selling them to consumers. Rising crude prices increase their raw material costs and can squeeze refining margins if they cannot fully pass on the higher costs. Conversely, lower crude prices generally support profitability by reducing input costs. Thus, higher crude prices tend to favour upstream companies, while lower or stable prices are usually more favourable for downstream companies.

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