1. Report Industry Investment Rating The report does not explicitly provide an overall industry investment rating. However, for individual products, it uses descriptions like "oscillating", "oscillating weakly", etc., with specific rating criteria provided at the end of the report [273]. 2. Core Viewpoints of the Report The chemical industry is following the decline of raw materials such as coal and crude oil due to the absence of the expected anti - involution policy. The downstream demand of most chemical products is less than expected during the peak season. Investors should approach oil - chemical products with an oscillating mindset and wait for the specific anti - involution policies of China's petrochemical industry [2][3]. 3. Summary by Related Catalogs 3.1 Market Situation and Logic of Each Product - **Crude Oil**: Supply pressure persists, and the rebound space is expected to be limited. Geopolitical prospects are uncertain, and the market is under supply pressure from OPEC+ rapid production increase and resilient US production. The high -开工 rate of refineries in China and the US is starting to decline, and the price is expected to oscillate weakly, with attention to short - term disturbances from Russia - Ukraine negotiations [6]. - **Asphalt**: As crude oil prices fall, asphalt futures prices oscillate and decline. The supply tension has eased, and the demand is not optimistic. The absolute price is overestimated, and the monthly spread is expected to decline with the increase of warehouse receipts [6][7]. - **High - Sulfur Fuel Oil**: It follows the decline of crude oil. The geopolitical premium has increased and then decreased with the increase of warehouse receipts. The demand has changed, and the cracking spread is still high. Geopolitical upgrades have a short - term impact on prices [8]. - **Low - Sulfur Fuel Oil**: It follows the decline of crude oil. It faces negative factors such as a decline in shipping demand, green energy substitution, and high - sulfur substitution. The supply is expected to increase, and the demand to decline, with low valuation and following crude oil fluctuations [10]. - **Methanol**: Port inventories are accumulating, but the inventory pressure in the inland is limited. The futures price oscillates. The market buying sentiment is relatively stable, and there may be long - term low - buying opportunities in the far - month [21]. - **Urea**: Foreign media reports have triggered an upward sentiment, but it is difficult to implement in practice. It is expected to fluctuate narrowly and oscillate [21]. - **Ethylene Glycol**: Both supply and demand are increasing, and the low inventory provides strong support. The price oscillates within a range, and the 09 - 01 reverse arbitrage position can be closed [14][16]. - **PX**: There is selling - short hedging pressure above, and the downstream polyester's willingness to chase the price has slowed down. The price is adjusted in the short term, with a relatively stable pattern and limited adjustment range [11]. - **PTA**: The cost support is insufficient, and the downstream polyester is waiting and watching, with poor purchasing enthusiasm. The price is expected to oscillate within the range of 4700 - 5000 [11]. - **Short - Fiber**: After the atmosphere cools down, the sales volume declines, and the price is passively adjusted. The price is expected to oscillate and sort out in the short term [16][17][18]. - **Bottle - Chip**: The production reduction in September remains at 20% and can be expanded to 30% if necessary. The price is expected to oscillate, with the absolute value following the raw materials [18][20]. - **PP**: There is still some supply pressure, and it oscillates. The impact of news on production reduction is limited, and the demand is cautious [24][25]. - **Propylene (PL)**: It follows PP to oscillate in the short term. The price is affected by sentiment and inventory, and the processing fee between PP and PL is a key focus [25]. - **Plastic**: The maintenance provides some support, and it oscillates in the short term. The impact of news on production reduction is limited, and the supply pressure persists [23]. - **Pure Benzene**: The inventories in the industry chain are all high, and it returns to a weak state. The short - term trend is dominated by sentiment, and it may return to inventory accumulation in the medium term [11][13]. - **Styrene**: The inventory pressure is prominent, and it resumes decline. The supply - demand situation is still bearish in the fundamentals, but short - term short - selling is against the trend [13][14]. - **PVC**: The market sentiment weakens, and it runs weakly. The cost is stable, and the supply is decreasing while the demand has not changed much [28]. - **Caustic Soda**: The spot rebound slows down, and the market observes the situation. The short - term spot increase slows down, and it is advisable to buy on dips in the long - term [28][29]. 3.2 Variety Data Monitoring - **Inter - period Spread**: The report provides inter - period spread data for multiple products such as Brent, Dubai, PX, PTA, etc., showing the changes in the spread [30]. - **Basis and Warehouse Receipts**: It includes basis and warehouse receipt data for products like asphalt, high - sulfur fuel oil, low - sulfur fuel oil, etc., reflecting the relationship between spot and futures prices and inventory status [31]. - **Inter - variety Spread**: The report presents inter - variety spread data such as 1 - month PP - 3MA, 1 - month TA - EG, etc., showing the price differences between different products [32].

Group 1 - The core viewpoint of the articles highlights the escalating conflict between Ukraine and Russia, with significant military actions resulting in substantial losses for both sides, particularly for Russia [2][5][11] - On August 28, Russia launched a large-scale attack involving 598 drones and 31 missiles, leading to at least 17 Ukrainian casualties and significant damage to Ukrainian infrastructure [5][11] - In retaliation, Ukraine conducted drone strikes on multiple Russian oil facilities, resulting in a loss of over 21% of Russia's refining capacity, exacerbating fuel shortages in the country [7][9] Group 2 - The ongoing attacks have led to the closure of over 12 Russian refineries, causing a gasoline shortage in various regions, including the south and far east of Russia [9][11] - Russia has implemented a temporary ban on gasoline exports to address the fuel crisis, indicating the severe impact of the conflict on its economy [9][11] - The situation is further complicated by EU sanctions, which have reportedly reduced Russia's oil revenue by 30%, adding to the economic strain [11][14] Group 3 - The articles suggest that if Ukraine continues to target Russian oil facilities, it could lead to a significant reduction in Russia's refining capabilities, potentially up to 70% [11][13] - The conflict has resulted in a stagnation of Russian military advances, with heavy losses and an inability to achieve initial objectives, indicating a shift in the war dynamics [13][14] - The commentary from Russian media reflects a growing concern about the economic and political parallels to historical crises, suggesting a potential for significant change in Russia's domestic situation [14][16]

1. Report Industry Investment Rating No information provided in the given content. 2. Core Views of the Report - High - sulfur fuel oil: The supply pressure in the near - term is relatively high, with disruptions in Russian refinery capacity and low - level exports from Mexico and the Middle East. The seasonal power - generation demand is gradually declining, but the feedstock demand is still supported by the low cost due to the decline in high - sulfur cracking and tax reform. Near - term, attention should be paid to the generation and digestion rhythm of high - sulfur warehouse receipts [3][4]. - Low - sulfur fuel oil: It will maintain a weak and volatile state. The supply pressure continues to increase while there is no specific demand driver. In the near - term, attention should be paid to the on - off situation of the Nigerian RFCC device [4]. - Strategy: For the fuel oil market, the unilateral trend is expected to be weakly volatile. It is recommended to pay attention to the short - term contango arbitrage opportunity for low - sulfur fuel oil, and there is no option recommendation [5][68]. 3. Summary According to the Directory 3.1 First Part: Preface Summary 3.1.1 Market Review - High - sulfur fuel oil in August: The supply was lower than expected. Disruptions in Russian refineries led to a decline in crude oil processing capacity, and the new coking unit of the Mexican Tula refinery reduced the external supply of high - sulfur fuel oil. The feedstock demand in China increased due to the decline in high - sulfur cracking and tax reform [3]. - Low - sulfur fuel oil in August: It maintained a weak and volatile state. The supply pressure continued to increase, with unstable operation of the Nigerian Dangote refinery's RFCC device and increased low - sulfur exports to the Pan - Singapore region from the Al - Zour refinery. The proportion of low - sulfur marine fuel bunkering in Singapore continued to decline marginally [3]. 3.1.2 Market Outlook - High - sulfur fuel oil: The near - term supply and high - inventory pressure continue. The seasonal power - generation demand is decreasing, but the feedstock demand is still supported. Attention should be paid to the generation and digestion rhythm of high - sulfur warehouse receipts [4]. - Low - sulfur fuel oil: It will maintain a weak and volatile state. The supply pressure continues to increase, and there is no specific demand driver. Attention should be paid to the on - off situation of the Nigerian RFCC device [4]. 3.1.3 Strategy Recommendation - Unilateral: Weakly volatile. - Arbitrage: Pay attention to the short - term contango arbitrage opportunity for low - sulfur fuel oil. - Options: None [5] 3.2 Second Part: Fundamental Situation 3.2.1 Market Review - High - sulfur fuel oil: The supply was lower than expected, and the feedstock demand in China increased. The spot premium continued to rise, and the high - sulfur cracking was still suppressed. The near - term inventory in Singapore decreased but remained at a high level [3][9]. - Low - sulfur fuel oil: It maintained a weak and volatile state. The supply pressure increased, and the proportion of low - sulfur marine fuel bunkering in Singapore continued to decline marginally. The spot premium fluctuated at a low level, and the low - sulfur cracking increased slightly with the gasoline cracking [3][10]. 3.2.2 Supply Overview - High - sulfur supply: - Russia: Refineries were continuously attacked, affecting the CDU capacity. The crude oil processing volume decreased in August, and the high - sulfur export supply is expected to decline in September if the situation continues [20][22]. - Mexico: The new coking unit of the Tula refinery reduced the external high - sulfur supply. The Olmeca refinery's processing volume was adjusted frequently, and the high - sulfur export mainly flowed to the US [24]. - Middle East: The US sanctions on Iran continued, and the high - sulfur export remained at a low level [28]. - Low - sulfur supply: - South Sudan: The supply of low - sulfur heavy raw materials has returned to stability, and the raw materials may flow more to the Pan - Singapore region after the port ban in Fujairah [50]. - Al - Zour refinery: The low - sulfur export is expected to remain at a high level, and the supply to the Pan - Singapore region increased [52]. - Nigeria: The RFCC device of the Dangote refinery was still unstable, and the Harcourt refinery was closed for two consecutive months. The low - sulfur export increased in August [53][54]. 3.2.3 Demand Overview - High - sulfur demand: - Ship - fuel bunkering: In July, the high - sulfur ship - fuel bunkering volume in Singapore and the market share in the Fujaeirah Port reached the highest level since IMO2020 [36]. - Feedstock demand: Supported by the decline in high - sulfur cracking and tax reform, the feedstock demand in China is expected to remain stable [43]. - Power - generation demand: The high - sulfur power - generation demand in Egypt and the Middle East is gradually declining [45][47]. - Low - sulfur demand: There is no specific demand driver, and the proportion of low - sulfur ship - fuel bunkering is declining marginally. In China, attention should be paid to the quota conversion between refined oil and low - sulfur fuel oil [55][56]. 3.2.4 Inventory and Valuation No specific content provided in the given documents. 3.3 Third Part: Future Outlook and Strategy Recommendation - Outlook: - High - sulfur fuel oil: The near - term supply and inventory remain high, but the supply pressure in the third quarter is slightly lower than expected. The seasonal power - generation demand is decreasing, and the feedstock demand is still supported. Attention should be paid to the risk of Yangshan Port being sanctioned and the inventory digestion rhythm [67]. - Low - sulfur fuel oil: The spot premium continues to decline. The supply is increasing, and the demand has no specific driver. Attention should be paid to the adjustment and issuance rhythm of low - sulfur quotas [67]. - Strategy: - Unilateral: Weakly volatile. - Arbitrage: Pay attention to the short - term contango arbitrage opportunity for low - sulfur fuel oil. - Options: None [68]

Group 1 - The United States has imposed a new 25% tariff on India, resulting in a total tariff of 50% on nearly all goods and services exported from India to the U.S., making India the country with the highest tariffs from the U.S. [1] - In 2024, India exported over $80 billion worth of goods and services to the U.S., including pharmaceuticals, telecommunications equipment, jewelry, fertilizers, cotton textiles, electronics, and seafood. The new tariffs are expected to significantly impact India's "Make in India" initiative, leading to industry shrinkage and layoffs [3]. - Following the imposition of the 50% tariff, India's exports are projected to suffer a loss of up to $37 billion, which is insufficiently offset by the $17 billion saved from purchasing cheap Russian oil since the outbreak of the Russia-Ukraine war in 2022 [3]. Group 2 - India has become the second-largest buyer of Russian oil, with its share of Russian oil exports rising from 1% in 2020 to 36% in 2025, while China's share increased from 34% to 46% [6]. - U.S. officials have criticized India's substantial purchases of Russian oil, claiming it provides funding for the Kremlin and undermines U.S.-India relations [8]. - The Indian refining industry has begun to adapt under U.S. pressure, with state-owned refineries starting to purchase non-Russian oil from the U.S., Brazil, and the Middle East [13]. Group 3 - Despite U.S. pressure, the Indian government maintains a firm stance, with reports indicating that former President Trump attempted to contact Prime Minister Modi regarding tariff issues but was unsuccessful [16]. - Indian Prime Minister Modi has engaged in discussions with Ukrainian President Zelensky about bilateral cooperation, but has not made concessions regarding limiting Russian energy exports [19]. - Indian state-owned oil companies have resumed purchasing Russian oil, indicating that as long as prices remain low, India is unlikely to abandon Russian oil [22].

Group 1: Attack on Ust-Luga Port - On August 24, 2025, Ukraine launched a coordinated drone strike targeting strategic nodes in Russia, including the Ust-Luga port, which is crucial for Russia's energy exports [2][3] - The Ust-Luga port is the largest in the Baltic region and accounts for 40% of Russia's liquefied natural gas exports, making it a key hub for energy transport to Europe [3][6] - The attack resulted in significant damage to the port's facilities, threatening large natural gas reserves and causing a fire at the site [3][5] Group 2: Tactical and Strategic Implications - Ukraine's drone strategy demonstrates a shift towards using large numbers of inexpensive drones to overwhelm expensive defense systems, as seen in previous conflicts [5] - The attack on Ust-Luga port aims to disrupt Russia's energy infrastructure, directly impacting its financial resources for the war and potentially causing domestic energy supply issues [6][8] - This pattern of targeting energy facilities reflects a broader strategy in modern conflicts, where such infrastructures are viewed as critical points of vulnerability [6] Group 3: Impact on European Energy Market - The attack exacerbates the already fragile energy supply situation in Europe, raising concerns about natural gas reserves as winter approaches [8] - Historical context shows that similar incidents, like the Nord Stream pipeline explosions, have led to significant price increases in natural gas, indicating potential for volatility in the market [8] - The Ust-Luga port's operational status is directly linked to the stability of European energy supplies, making its security a matter of regional concern [8] Group 4: Geopolitical Reactions - The international community is closely monitoring the situation, with potential implications for U.S. and NATO responses towards Russia [10] - There is a possibility of increased pressure and sanctions on Russia from Western allies following the attack [10] - The event highlights the complexities of geopolitical dynamics, with calls for restraint and negotiation from neutral parties amidst ongoing conflict [10]

Core Viewpoint - The refining and chemical industries are facing significant challenges due to slowing demand growth, the rise of electric vehicles, and ongoing capacity expansion, leading to a projected decline in refining margins by about 5% to 30% by 2030 [3][4]. Recent Trends and Market Outlook - The refining market is expected to see a notable decline in profit margins, primarily driven by demand slowdown and capacity expansion disrupting supply-demand balance [3]. - The chemical market is also under pressure, with rapid capacity expansion, especially in China, outpacing demand growth, leading to overcapacity and compressed profit margins [3]. Challenges for Asian Refining and Chemical Industries - The evolving market dynamics are reshaping the competitive landscape, necessitating adaptation from companies [4]. - Uncertainties in carbon neutrality policies complicate long-term planning for refining and chemical companies, potentially leading to the exit of outdated capacities and cancellation of planned projects [4]. - Geopolitical tensions and fluctuating trade policies are adding further challenges, with tariffs on key raw materials increasing production costs by approximately 7% [4]. Strategic Pathways for Survival - Companies are focusing on cost reduction, capacity optimization, and digital transformation to navigate the challenges in the refining and petrochemical sectors [5]. - Operational transformation is essential for survival, with companies leveraging various strategies to enhance operations and profitability [5][6]. Production and Optimization - Linear programming (LP) models can provide insights to capture high-value opportunities with minimal investment, potentially increasing capacity by up to 5% [7]. - Advanced process control (APC) is being deployed to optimize operations and improve product yields, with potential cost reductions of $0.3 per barrel [8]. Efficient Maintenance - Effective maintenance strategies can significantly reduce costs and downtime, with potential savings of 5-15% on turnaround costs [10]. - Predictive maintenance is being utilized to monitor equipment health and reduce unplanned downtime [10]. Capital Expenditure (CAPEX) Optimization - Optimizing CAPEX is crucial for addressing tightening capital constraints and ensuring maximum returns while minimizing costs and risks [11]. - Structured methodologies like risk threat prioritization (RTP) are being employed to ensure rigorous evaluation of capital projects, leading to CAPEX reductions of 10-20% [11][13]. Sales Optimization - Optimizing commercial performance is vital for maintaining profitability, with effective sales strategies leveraging data-driven analysis to accelerate revenue growth [14]. - Dynamic pricing models based on customer willingness to pay are being adopted to maximize revenue and profit [15]. Conclusion - The Asian refining and petrochemical industries are entering a period of structural upheaval, with traditional advantages becoming less reliable [16]. - Future winners will be those companies that can adapt quickly to market changes, deeply integrate digital technologies, and optimize costs and product portfolios [16].

Summary of Key Points from Conference Call Records Industry Overview - The global refining and olefins industry is expected to see a decline in refining margins after reaching a peak around 2030, influenced by geopolitical factors, carbon taxes, and the transition to renewable energy. Approximately 1.5 million tons per day of refining capacity has been announced for closure or conversion, with China accounting for 50% of this capacity [1][5][34]. - By 2035, about 22% of global refining capacity (18.4 million barrels per day) is at risk of closure, primarily concentrated in Europe and the Middle East. National Oil Companies (NOCs) are less inclined to close facilities due to government support, while International Oil Companies (IOCs) are more likely to close or sell unprofitable refineries [1][7][8]. Olefins Market Dynamics - Since 2020, global ethylene investment has been predominantly led by China, with private companies like Longsheng and Hengli entering the market significantly. From 2025 to 2028, major state-owned companies like PetroChina and Sinopec are expected to lead investments, shifting focus towards increasing petrochemical production [1][11][12]. - Approximately 40%-50% of global ethylene assets are currently at a loss or breakeven, indicating that the industry is at a cyclical low. China has seen a surge in new refining projects since 2017, leading to global oversupply, while Europe faces significant pressure due to high energy prices and carbon tax issues [1][14][15]. Regional Insights - In the U.S., a refinery in the PAD3 region with a capacity of 290,000 barrels per day has announced closure and will transition to hydrogen production by 2025. Other refineries are also shifting towards renewable fuel production [6][25]. - In Europe, the refining landscape is undergoing structural adjustments, with several companies announcing closures or asset sales to adapt to economic and environmental challenges. By 2028, European ethylene capacity is expected to decrease by 12% compared to 2024 [23][24]. Future Projections - The global refining industry is projected to peak in demand for crude oil and chemical products around 2030 or 2031, after which refining profits and utilization rates will gradually decline. This trend is expected to lead to more local refineries exiting the market, particularly in China and Europe [34][36]. - The ethylene market's future will largely depend on investment levels and the rate of capacity elimination. While the pace of new projects may slow, it does not imply cancellations, especially for large enterprises. Economic recovery in China is expected to significantly impact demand for petrochemical products [36][28]. Risk Assessment - Approximately 63 million tons of global ethylene capacity is at risk of closure, representing 27% of the total capacity by 2025. High and medium-risk capacities are primarily concentrated in Asia and Europe, with North America and Russia having lower closure rates [18][19]. - In China, around 11 million tons of ethylene capacity is at risk of closure in the next five years, with significant portions being high-risk. The government is tightening approvals for new ethylene projects, which is expected to alleviate pressure on domestic refining companies [21][19]. Conclusion - The refining and olefins industries are facing significant transformations driven by market dynamics, regulatory changes, and geopolitical factors. The future landscape will be shaped by capacity adjustments, investment trends, and the ongoing transition towards more sustainable energy sources.

Summary of Key Points from the Conference Call Industry Overview - The chemical industry is currently at the bottom of the cycle, but leading Chinese companies have strong cash flow and low debt ratios, which may enhance potential dividend yields as capacity expansion slows down [1][3][5] - Global GDP growth supports chemical demand, and changes on the supply side combined with demand growth are expected to lead to a recovery in industry prosperity [1][4] Key Insights - The "anti-involution" policy aims to control new capacity in sectors like coal chemical, refining, and polyurethane, which may still yield considerable dividend rates even at the cycle's bottom [1][5] - The industrial silicon and soda ash sectors, which are currently in surplus, have greater elasticity due to restrictions on existing and new capacities [1][5] - The oil and gas chemical sector has begun to see positive free cash flow in 2024, indicating a gradual improvement in the industry [8] Financial Metrics - In 2024, the net cash flow for the chemical industry is projected to shrink to nearly 20 billion, while total operating cash flow exceeds 250 billion [7] - Capital expenditures are expected to decrease from 350 billion to below 300 billion [7] - By 2025 or 2026, the industry is anticipated to generate positive net free cash flow, marking a historic shift [7] Company-Specific Insights - Hualu Hengsheng's market value in 2024 is approximately 50.6 billion, with cash flow expected to rise from 5 billion in 2025 to 8.3 billion by 2027, suggesting attractive dividend yields even in a downturn [9] - The European chemical production capacity utilization is at a historical low of around 74%, indicating that high-cost production is unlikely to recover, which benefits Chinese companies with cost advantages [10][11] Future Trends - The chemical industry is expected to see a rebound in prosperity due to low inventory levels and attractive valuations [11] - The exit of high-cost European production will allow Chinese leaders to further consolidate and expand their market positions [11] - The polyurethane sector is currently at a cyclical low, but price recovery is anticipated due to supply constraints and demand growth [18][19] Challenges and Opportunities - The olefin industry faces challenges with low prices, but strict approval processes for new capacities may lead to a recovery if production contracts [16] - The refining sector is grappling with overcapacity and outdated facilities, but the anti-involution policy may help improve market conditions for major players [17] - The organic silicon market is at a historical low, but limited new capacity and potential overseas exits may lead to a recovery in the medium to long term [24][25][26] Sector-Specific Recommendations - Focus on companies in controlled capacity sectors like coal chemicals (e.g., Hualu Hengsheng, Baofeng Energy) and refining (e.g., Sinopec) for potential dividend yields [5][17] - Monitor the industrial silicon market for companies like Hesheng Silicon Industry, which may see profit doubling if prices recover [32] - In the soda ash sector, companies like Boyuan Chemical are worth watching as they navigate a challenging market [33] Conclusion - The chemical industry is poised for a potential recovery driven by policy changes, strong cash flows from leading companies, and a favorable global economic backdrop. Investors should focus on companies with strong fundamentals and those positioned to benefit from supply-side constraints and market shifts.

| | | | | | | 投资咨询业务资格:证监许可[ 2012 ]31号 [TG 国贸期货 | | --- | --- | --- | --- | --- | --- | --- | | | | | | | | ,烯数据 FR | | | | | | | 国贸期货研究院 | 投资咨询证:Z0017251 2025/08/25 | | | | | | | 能源化工研究中心 陈胜 | 从业资格证:F3066728 | | | 指标 | or C | 2025/08/21 | 2025/08/22 | 变动值 | 一现货综述 | | | 原油& | WTI | 62. 35 | 63.52 | 1. 17 | | | | 石脑油 | Brent | 65. 79 | 67.67 | 1.88 | | | | | 石脑油 | 574.5 | 584.5 | 110 | | | | | 乙烯 CFR东北亚 | | | | 苯乙烯:江苏市场涨价。成本存支撑,原油、纯苯整 | | 游 | | | 825 | 830 | 5 | 理,苯乙烯市场有装置检修消息和补货成交提振,现 | | | 纯苯 | CFR中国 | 747 ...

Group 1 - South Korea has committed to purchasing $100 billion worth of U.S. energy products as part of a trade agreement to mitigate the impact of a 15% tariff imposed by the U.S. on Korean imports [3][4] - The actual implementation of this energy agreement faces significant challenges, as South Korean refiners have already been gradually shifting towards U.S. crude oil sources over the years [4][5] - Data from Kpler indicates that imports of WTI Midland crude oil from the U.S. to South Korea have increased from 283,000 barrels per day in 2020 to 465,000 barrels per day projected for 2025, but total crude oil imports remain stable at 2.8 to 3 million barrels per day [4][5] Group 2 - The South Korean refining system is primarily designed to process heavier crude oils from the Middle East, making a significant shift to U.S. light crude oil challenging without impacting operational efficiency and profitability [5][6] - Major South Korean refineries, such as SK Energy's Ulsan refinery, are blending WTI with heavier crude oils from Iraq, Kuwait, and Saudi Arabia to maintain full production capacity [5][6] - The current strategy for South Korea involves marginally increasing U.S. crude oil imports while maintaining traditional reliance on heavier crude from the Persian Gulf, creating a dilemma between satisfying U.S. demands and preserving the domestic energy system [6][7]