Middle East supply disruption lifted LyondellBasell’s Q2 2026 revenue 19.8% to $9.18B and adjusted EPS to $4.30 (from $0.62), while a $734M loss on exiting four European sites cut GAAP EPS to $1.71.
Revenue
$9.2B
+19.8% YoY
Net income
$559M
+386.1% YoY
Diluted EPS
$1.71
+402.9% YoY
Operating margin
16.8%
Headline: a supply shock more than quadrupled underlying profit, and a $734 million European exit charge hid part of it
LyondellBasell's second quarter of 2026 was its strongest in some time, and most of that came from outside the company. The conflict in the Middle East took a large share of global petrochemical supply off the market. Prices for plastics and chemical intermediates went up much faster than LyondellBasell's own raw-material costs. Revenue rose 19.8% year over year to $9.18 billion. Cost of sales rose only 3.9%, from $6.87 billion to $7.14 billion. Gross profit, meaning revenue minus the direct cost of making the products, more than doubled from $787 million to $2.04 billion.
GAAP net income was $559 million, or $1.71 per diluted share, compared with $115 million ($0.34) a year earlier. Those figures include a $734 million pre-tax loss on selling four European olefins and polyolefins sites, which the company closed on May 1. Excluding that loss and other items the company calls "identified items," net income was $1.40 billion, or $4.30 per share, up from $0.62 in Q2 2025 and $0.49 in Q1 2026.
Key metrics
Metric
Q2 2026
Q2 2025
YoY Change
Revenue
$9,177M
$7,658M
+19.8%
Cost of sales
$7,139M
$6,871M
+3.9%
Operating income
$1,543M
$285M
+441.4%
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Operating margin is operating income divided by revenue: the share of each sales dollar left after running the plants and the company, before interest and tax. The $734M sale loss sits below operating income, so it does not affect that line. EBITDA is earnings before interest, taxes, depreciation and amortization. It is the profit measure LyondellBasell uses for its segments. Segment margins here are segment EBITDA divided by segment sales, including sales to other LyondellBasell segments. "Identified items" is the company's own non-GAAP adjustment (see below).
What drove it: spreads, not volumes
In a commodity chemicals business, what matters is the spread: the gap between the price a product sells for and the cost of the feedstock (the raw material, such as natural gas liquids or oil-derived naphtha) used to make it. Selling more product barely moves profit when spreads are thin. When spreads widen, profit rises much faster than revenue. That is what happened this quarter.
The 10-Q attributes the change from Q1 2026 to Q2 2026 almost entirely to price. Company revenue rose 28% quarter over quarter. Higher average sales prices added 33%, and lower volumes from the European divestiture took away 5%. Management writes that prices rose on "industry-wide supply constraints stemming from the conflict in the Middle East."
O&P-Americas (olefins and polyolefins, North America) did most of the work. Olefins are basic building-block chemicals such as ethylene. Polyolefins are the plastics made from them, polyethylene and polypropylene. Segment EBITDA rose from $313 million to $1.18 billion year over year, and segment revenue rose 48%. Per the filing, 70% to 80% of the raw material fed to LyondellBasell's North American crackers (the large units that break feedstock down into ethylene) is ethane. Ethane is a natural gas liquid priced off US natural gas, not off oil. When a supply disruption pushes global plastic prices up and US ethane does not follow, a US ethane-based producer keeps most of the difference. The filing says EBITDA rose on "stronger margins across all businesses as prices increased due to industry supply constraints," with favorable co-product pricing as well. The earnings release says the North American assets ran at about 90% utilization. Q2 also included a $74 million write-off of LyondellBasell's 50% stake in a Houston plastic-waste sorting facility. The company tied that write-off to the slower pace of its US recycling investments, including postponing the final investment decision on its MoReTec-2 recycling plant.
I&D (Intermediates & Derivatives) grew EBITDA 31.8% to $377 million, even though its Bayport propylene oxide/TBA unit was down unexpectedly for part of the quarter. The unit restarted in June. Relative to Q1, the 10-Q credits price: higher average prices lifted revenue 33%, "primarily due to high octane values in the U.S. Gulf Coast and Europe driven by tight supply." That matters because the segment's oxyfuels products are gasoline blending components. The release also cites better methanol and propylene-oxide-derivative margins.
APS (Advanced Polymer Solutions) is the compounding business that turns base plastics into specialty grades. It more than doubled EBITDA to $77 million. The half-year comparison shows this came from price, not demand: margins added 101% to EBITDA and lower volumes, "stemming from weaker demand," took away 35%. Customers paid more but bought less.
The European exit: an accounting loss and a smaller segment
On May 1, LyondellBasell completed the sale of its olefins and polyolefins sites at Berre l'Etang (France), Münchsmünster (Germany), Carrington (UK) and Tarragona (Spain). The $734 million pre-tax loss includes a $310 million cash contribution that LyondellBasell paid into the divested businesses at closing. It also includes $329 million of accumulated currency-translation losses that moved from equity into the income statement. In other words, LyondellBasell paid to exit plants that were losing money, and the loss is not an operating result.
Without that loss, O&P-EAI (Europe, Asia and International) EBITDA would have been about $302 million, compared with $2 million a year earlier. That figure is still a mix of items. It includes a $52 million gain on selling surplus European emissions credits and higher earnings from joint ventures (equity income of $39 million vs. $3 million). It is reduced by $31 million of employee costs for the planned closure of the Brindisi polypropylene unit in Italy. On a GAAP basis the segment reported a $432 million EBITDA loss.
The sale also means the year-over-year revenue comparison understates the pricing effect. Q2 2025 included three full months of the four divested sites, while Q2 2026 included only April. Against Q1, lower European volumes took 19 percentage points off O&P-EAI revenue, and higher prices added 38 points.
Why GAAP and adjusted earnings are so far apart
Identified items reduced Q2 net income by $842 million after tax, or $2.59 per share. The biggest pieces were the $734 million sale loss, the $74 million write-down, $31 million of Cash Improvement Plan costs and $30 million of site-closure costs. The tax line adds to the gap. The Q2 effective tax rate was 29.2%, and the filing says the sale loss is "largely nondeductible for tax," which alone raised the rate by 14.2 percentage points. So the company recorded the loss in full but got almost no tax benefit from it.
Cash, debt and the dividend
Earnings improved faster than cash. Operating cash flow was $752 million in Q2 and $483 million for the half, compared with an outflow of $228 million in H1 2025. Rising prices tied up cash: receivables grew by $1.69 billion and inventories by $521 million in the first half, partly offset by $721 million more in payables. Q2 also included the $310 million European payment. Capital spending fell to $539 million in H1, from $1,022 million a year earlier, under the company's Cash Improvement Plan. Management says the plan is on target to deliver $500 million of incremental cash by the end of 2026.
At June 30, LyondellBasell held $2.63 billion in cash against $12.91 billion of total debt, and there were no share buybacks in 2026. Its credit facility now restricts repurchases to offsetting dilution. The quarterly dividend was cut in February 2026 to $0.69 per share, down from $1.37 in the same quarter of 2025, and dividends paid in H1 fell from $878 million to $448 million. The better Q2 results came after that cut.
Takeaway: LyondellBasell's Q2 profit came mostly from a temporary external shock, not from a structural change. Competing supply disappeared and US ethane stayed cheap, so O&P-Americas EBITDA nearly quadrupled on 48% more revenue, while APS volumes actually fell. How long that lasts depends on when Middle East supply returns, and management does not expect recovery before 2027. The lasting gains are smaller: a European footprint with four fewer sites and lower capital spending. The balance sheet, with $12.9 billion of debt and a halved dividend, still shows the downturn that came before this quarter.
Outlook
Management gives no earnings guidance. It gives operating rates (how much of the plants' capacity it expects to run) and a market view:
Middle East supply: conditions "remain fluid," and the return of conflict-affected supply is uncertain, "with the recovery period likely extending into 2027." Management does not expect material demand weakness but warns that price uncertainty "could temporarily impact normal buying patterns." That means customers may delay orders while they wait to see where prices go.
Q3 operating rates: about 85% for North American O&P, 70% for European O&P and 85% for I&D. Q2 North American assets ran at about 90%. Planned downtime at the Clinton polyolefins facility will reduce second-half volumes. The Bayport restart should add I&D volume.
Capital allocation: priority on deleveraging, including repaying a note that matures in September 2026, then the dividend, then selective investment.
Our read: Q3 should still benefit from constrained supply, but results are likely to fall from Q2's level on the lower North American operating rate and the Clinton outage. Profit in this business also reacts sharply to spreads in both directions, so any easing of the Middle East disruption would narrow margins quickly. The costs of the price spike are already visible in the balance sheet (working capital) and in APS's falling volumes. The European sale and capex cuts should make the next downturn less costly. They do not make the current margins durable. The main things to watch in Q3 are O&P-Americas polyethylene spreads and whether working capital starts returning cash.
Source: LyondellBasell Form 10-Q for the quarter ended June 30, 2026 (filed July 31, 2026). Non-GAAP figures ("excluding identified items") and utilization commentary are from the company's Q2 2026 earnings release (Exhibit 99.1 to the Form 8-K filed the same day).