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OIL: Asia Refiners Considers Run Cuts As Margins Fall

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Asian oil refiners are either cutting or considering run rates as crude and freight costs rise and margins are eroded in reaction to the US sanctions on Russia, Bloomberg said.

  • China independent refiners and merchant refiners in Singapore, South Korea and Taiwan are the most vulnerable to the rising costs.
  • “A feedstock shortage, coupled with higher costs for alternative crude, has prompted many independent refineries to trim runs by 10% to 20%,” said Mia Geng at FGE.
  • Activity at the teapots will likely fall further in February but could recover in March on improved feedstock availability and higher seasonal domestic diesel demand, Geng added.
  • A decline in Russian oil supply has raised interest in non-sanctioned alternatives such as Oman crude and Abu Dhabi’s Murban and driven freight rates higher.
  • Merchant refiner margins have dropped from $2-$3/bbl to a small loss causing a temporary halt to additional spot cargoes purchases as run cuts or temporary closures are considered, Bloomberg sources said.

 

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Asian oil refiners are either cutting or considering run rates as crude and freight costs rise and margins are eroded in reaction to the US sanctions on Russia, Bloomberg said.

  • China independent refiners and merchant refiners in Singapore, South Korea and Taiwan are the most vulnerable to the rising costs.
  • “A feedstock shortage, coupled with higher costs for alternative crude, has prompted many independent refineries to trim runs by 10% to 20%,” said Mia Geng at FGE.
  • Activity at the teapots will likely fall further in February but could recover in March on improved feedstock availability and higher seasonal domestic diesel demand, Geng added.
  • A decline in Russian oil supply has raised interest in non-sanctioned alternatives such as Oman crude and Abu Dhabi’s Murban and driven freight rates higher.
  • Merchant refiner margins have dropped from $2-$3/bbl to a small loss causing a temporary halt to additional spot cargoes purchases as run cuts or temporary closures are considered, Bloomberg sources said.

 

Keep reading...Show less