After the increase in oil prices in the early seventies, a gradual shift has been observed in the global petrochem scenarion in the last three decades. The change has become more prominent in the nineties and also in the present decade. Oil price, that had remained pegged below US$10/barrel, averaged to US$50-60/barrel in the decade of 2000-2010. It is likely to go up even further in the remaining years of this decade.
On the supply side:
The Middle Eastern region, on account of its rich oil fields and reserves, has been developing newer petrochemical complexes. The huge production capacity of these complexes meet not only the regions� domestic demand which incidentally is rather small on account of its lower population, but also generates huge surpluses that are utilized towards exports, thereby leading to more money on account of better price realization.
On the demand side:
Asia, on account of its population and growing economy and affluence, particularly from China, has increased its petrochemical demand, since downstream processed products across a spectrum of diverse sectors for common daily use require petrochemicals.
These two factors have influenced the change in the global petrochemical supply-demand scenario over the last two decades.

The US petrochem industry has traditionally held the numero uno position for global petrochem production as well as exports. The US petrochemical industry has gone through several phases in its lifecycle path starting from initial growth and capacity expansions to a scenario of reduced marginal returns that led to dealing with a possible slump. This slump was bolstered by several competitive or resource constraints, some of which have visibly manifested by way of high feedstock prices. Rising feedstock prices are forcing many US petrochem giants to reassess their bottom line in comparison to that of global players. This has resulted in a scenario where the US players have opted to take a back foot on overall interest in market activity. High feedstock prices have also forced producers to reconsider a reduction in investment outlays. Long term capital investments are giving way to short term investments by way of organizational efficiencies and asset management systems. The lack of investment focus is also resulting in labour issues for rates which are directly impacting production. Diminishing feedstock surpluses continue to further plague the producers with increasing costs. High feedstock price has created an imbalance in the market, rendering the US petrochemical industry to take a backseat and amend the role that it once played- from that of a dominant exporter to that of a net importer by 2010. This makes the future of the US petrochemical industry appear very uncertain.

The second largest conventional player- the European petrochemicals industry, is coming under increasing strain from two distinct quarters :
Oil-producing Middle East countries, with access to cheap and abundant feedstock; and China, with access to a burgeoning domestic market - the largest in the world, continue large scale investments to secure a larger share of the world market. Secondly, European regulations, however well intentioned, are placing a further heavy burden on the continent's big petrochemicals groups. Regulations include European Union's Reach directive on chemicals, the Kyoto protocol, and moves by individual countries to step up their environmental campaigns. This is making it even harder for them to compete with the new capacity, which will soon be flowing out of the developing world.

By 2015, the Middle East region is expected to surpass Europe in terms of ethylene capacity. The region is estimated to account for about 20% of world ethylene capacity, against 17% share of Europe.
Already the Middle East accounts for more than 10% of the World ethylene capacity, the key building block for plastics, chemical fiber and synthetic rubber. Saudi Arabia alone is investing US$80 billion in this sector over the next five years and its flagship company, Aramco, is to build a giant new petrochemical complex in partnership with Dow Chemical of the US.
The Middle East is targeting lower cost products towards Asian markets, especially China where most of the current demand exists. China remains the big export market with petrochemical demand expected to keep rising by around 9% every year between now and 2012 compared with a meager 1.8% pa for the US and Europe. However, the Chinese are also continuing with their own petrochemical investments. As the Chinese raise their domestic capacity, Middle East producers are likely to turn to Europe to dispose of future surplus capacity. Russia too is expected to start investing heavily in petrochemicals in the next few years. Thus, pressures are likely to be particularly acute for European manufacturers, who are now coming under far more stringent regulatory constraints than their competitors in emerging markets and oil producing countries.