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The Star
3 days ago
- Business
- The Star
Global oil refiners see short-term boost
LONDON: Refiners across the globe are reaping unexpected profits from producing key fuels in recent weeks, offering an ailing sector respite before an anticipated weakening later this year, as plant closures have tightened fuel supply needed to meet peak summer demand. The strength in fuel markets contrasts with crude oil prices falling to a four-year low in May, after the Organisation of the Petroleum Exporting Countries and its allies (Opec+) unwound output cuts faster than planned. It also suggested demand has so far proved resilient despite ongoing concerns about the impact of tariffs. 'Margins are strong because the balance of products – supply and demand – is still tight,' said Sparta Commodities analyst Neil Crosby. Refining margins reflect the profits a plant makes from processing crude oil into fuels such as petrol or diesel. Just a few months ago, oil majors were warning 2025 would be a bleak year for refining. TotalEnergies and BP reported lower first quarter profits because of weaker earnings from fuels. Refiners have broadly struggled with waning demand from economic slowdowns, an increasing uptake of electric vehicles and competition from newer plants in Asia and Africa. Global composite refining margins reached US$8.37 per barrel in May 2025, according to consultancy Wood Mackenzie, their highest since March 2024, but still much lower than the US$33.50 average in June 2022 during the post-pandemic demand recovery and in the wake of Russia's invasion of Ukraine. Closures in the United States and Europe have slowed global net refinery capacity growth below demand growth, helping to make operational refineries relatively more profitable. Global diesel supply could decline by 100,000 barrels per day (bpd) year-on-year in 2025, while demand will drop 40,000 bpd, according to energy consultancy FGE. Petrol supply will decline by 180,000 bpd, with demand rising by 28,000 bpd. 'We are therefore seeing a tighter product market for key transport fuels, which is exerting upwards pressure on margins, much to the relief and joy of regional refiners,' said FGE's head of refined products Eugene Lindell. Refiners of all fuel-producing configurations are benefitting from current margins, FGE's head of refining Qilin Tam added, as light fuels such as petrol and heavy products like fuel oil have recently increased. In Europe, closures include Petroineos' Grangemouth refinery in Scotland and Shell's Wesseling facility this year, as well as a part closure of BP's Gelsenkirchen refinery. In the United States, LyondellBasell's Houston refinery was shuttered this year, while Phillips 66's Los Angeles refinery and Valero's Benicia refinery are set to close in October 2025 in April 2026, respectively. Unplanned refinery shutdowns have also compounded the impact of closures. A power outage across the Iberian peninsula on April 28 took around 1.5 million bpd of refinery capacity offline, JPMorgan noted, with 400,000 bpd of that still shut in two weeks later. Two of the world's major new refinery projects, Nigeria's giant Dangote refinery, and Mexico's Olmeca refinery, both had unplanned outages on petrol-producing units in April. Fuel inventories at key hubs have declined this year, creating extra demand for refinery production heading into the peak summer season. Stocks in the Organisation for Economic Co-operation and Development region, which includes the United States, the European Union and Singapore, fell by 50 million barrels from January to May, according to JPMorgan analysts. 'This significant reduction in product stocks has underscored the resilience in product prices,' the analysts said. Global fuel demand in the northern hemisphere is highest in summer as motoring and air travel increase. In the Middle East, heavy fuel oil demand peaks in summer to meet cooling demand when temperatures soar. 'Strength in the northern hemisphere summer demand growth is where we see some support to margins,' said Rystad Energy analyst Janiv Shah. US refining executives have been upbeat on demand, while noting relatively low stocks. 'Our current petrol supply outlook is for those inventories to continue to tighten,' Phillips 66 executive vice-president Brian Mandell said on the firm's first quarter earnings call. Marathon Petroleum's domestic and export businesses were seeing steady demand for petrol, and growth for diesel and jet fuel compared to 2024, chief executive officer Maryann Mannen said on its earnings call. However, analysts have warned that the current strength may soon fade as demand is hit by trade wars, and as fuel production rises as plants look to profit from higher margins. 'We have the view that there is a bit of a short-term bump,' Wood Mackenzie analyst Austin Lin said. Global oil demand growth is set to average 650,000 bpd for the remainder of 2025, falling from just short of one million bpd in the first quarter as trade uncertainty weighs on the global economy, according to the International Energy Agency. 'Refiners should be hedging everything now, as I think this is as good as it gets for them,' a veteran oil trader, who asked not to be named, added. — Reuters
Khaleej Times
4 days ago
- Business
- Khaleej Times
Global oil refiners see short-term boost from higher margins
Refiners across the globe are reaping unexpected profits from producing key fuels in recent weeks, offering an ailing sector respite before an anticipated weakening later this year, as plant closures have tightened fuel supply needed to meet peak summer demand. The strength in fuel markets contrasts with crude oil prices falling to a four-year low in May, after Opec+ unwound output cuts faster than planned. It also suggests demand has so far proved resilient despite ongoing concerns about the impact of tariffs. "Margins are strong because the balance of products — supply and demand — is still tight," said Sparta Commodities analyst Neil Crosby. Refining margins reflect the profits a plant makes from processing crude oil into fuels such as gasoline or diesel. Just a few months ago, oil majors were warning 2025 would be a bleak year for refining. TotalEnergies and BP reported lower first-quarter profits because of weaker earnings from fuels. Refiners have broadly struggled with waning demand from economic slowdowns, an increasing uptake of electric vehicles, and competition from newer plants in Asia and Africa. Global composite refining margins reached $8.37 per barrel in May 2025, according to consultancy Wood Mackenzie, their highest since March 2024, but still much lower than the $33.50 average in June 2022 during the post-pandemic demand recovery and in the wake of Russia's invasion of Ukraine. Closures in the United States and Europe have slowed global net refinery capacity growth below demand growth, helping to make operational refineries relatively more profitable. Global diesel supply could decline by 100,000 barrels per day (bpd) year-on-year in 2025, while demand will drop 40,000 bpd, according to energy consultancy FGE. Gasoline supply will decline by 180,000 bpd, with demand rising by 28,000 bpd. "We are therefore seeing a tighter product market for key transport fuels which is exerting upwards pressure on margins, much to the relief and joy of regional refiners," said FGE's head of refined products Eugene Lindell. Refiners of all fuel-producing configurations are benefitting from current margins, FGE's head of refining Qilin Tam added, as light fuels such as gasoline and heavy products like fuel oil have recently increased. In Europe, closures include Petroineos' Grangemouth refinery in Scotland and Shell's Wesseling facility this year, as well as a part closure of BP's Gelsenkirchen refinery. In the US, LyondellBasell's Houston refinery was shuttered this year, while Phillips 66's Los Angeles refinery and Valero's Benicia refinery are set to close in October 2025 in April 2026 respectively. Unplanned refinery shutdowns have also compounded the impact of closures. A power outage across the Iberian peninsula on April 28 took around 1.5 million bpd of refinery capacity offline, JPMorgan noted, with 400,000 bpd of that still shut in two weeks later. Two of the world's major new refinery projects, Nigeria's giant Dangote refinery, and Mexico's Olmeca refinery, both had unplanned outages on gasoline-producing units in April. Tighter balances Fuel inventories at key hubs have declined this year, creating extra demand for refinery production heading into the peak summer season. Stocks in the OECD region, which includes the U.S., EU and Singapore, fell by 50 million barrels over January-May, according to JPMorgan analysts. "This significant reduction in product stocks has underscored the resilience in product prices," the analysts said. Global fuel demand in the northern hemisphere is highest in summer as motoring and air travel increase. In the Middle East, heavy fuel oil demand peaks in summer to meet cooling demand when temperatures soar. "Strength in the northern hemisphere summer demand growth is where we see some support to margins," said Rystad Energy analyst Janiv Shah. US refining executives have been upbeat on demand, while noting relatively low stocks. "Our current gasoline supply outlook is for those inventories to continue to tighten," Phillips 66 executive vice president Brian Mandell said on the firm's first-quarter earnings call. Marathon Petroleum's domestic and export businesses were seeing steady demand for gasoline, and growth for diesel and jet compared to 2024, CEO Maryann Mannen said on its earnings call. However, analysts have warned that the current strength may soon fade as demand is hit by trade wars, and as fuel production rises as plants look to profit from higher margins. "We have the view that there is a bit of a short-term bump," Wood Mackenzie analyst Austin Lin said. Global oil demand growth is set to average 650,000 bpd for the remainder of 2025, falling from just short of 1 million bpd in the first quarter as trade uncertainty weighs on the global economy, according to the International Energy Agency. "Refiners should be hedging everything now, as I think this is as good as it gets for them," a veteran oil trader, who asked not to be named, added.
Reuters
4 days ago
- Business
- Reuters
Global oil refiners see short-term boost from higher margins
LONDON, June 3 (Reuters) - Refiners across the globe are reaping unexpected profits from producing key fuels in recent weeks, offering an ailing sector respite before an anticipated weakening later this year, as plant closures have tightened fuel supply needed to meet peak summer demand. The strength in fuel markets contrasts with crude oil prices falling to a four-year low in May, after OPEC+ unwound output cuts faster than planned. It also suggests demand has so far proved resilient despite ongoing concerns about the impact of tariffs. "Margins are strong because the balance of products - supply and demand - is still tight," said Sparta Commodities analyst Neil Crosby. Refining margins reflect the profits a plant makes from processing crude oil into fuels such as gasoline or diesel. Just a few months ago, oil majors were warning 2025 would be a bleak year for refining. TotalEnergies and BP reported lower first-quarter profits because of weaker earnings from fuels. Refiners have broadly struggled with waning demand from economic slowdowns, an increasing uptake of electric vehicles, and competition from newer plants in Asia and Africa. Global composite refining margins reached $8.37 per barrel in May 2025, according to consultancy Wood Mackenzie, their highest since March 2024, but still much lower than the $33.50 average in June 2022 during the post-pandemic demand recovery and in the wake of Russia's invasion of Ukraine. Closures in the United States and Europe have slowed global net refinery capacity growth below demand growth, helping to make operational refineries relatively more profitable. Global diesel supply could decline by 100,000 barrels per day (bpd) year-on-year in 2025, while demand will drop 40,000 bpd, according to energy consultancy FGE. Gasoline supply will decline by 180,000 bpd, with demand rising by 28,000 bpd. "We are therefore seeing a tighter product market for key transport fuels which is exerting upwards pressure on margins, much to the relief and joy of regional refiners," said FGE's head of refined products Eugene Lindell. Refiners of all fuel-producing configurations are benefitting from current margins, FGE's head of refining Qilin Tam added, as light fuels such as gasoline and heavy products like fuel oil have recently increased. In Europe, closures include Petroineos' Grangemouth refinery in Scotland and Shell's Wesseling facility this year, as well as a part closure of BP's Gelsenkirchen refinery. In the U.S., LyondellBasell's Houston refinery was shuttered this year, while Phillips 66's Los Angeles refinery and Valero's Benicia refinery are set to close in October 2025 in April 2026 respectively. Unplanned refinery shutdowns have also compounded the impact of closures. A power outage across the Iberian peninsula on April 28 took around 1.5 million bpd of refinery capacity offline, JPMorgan noted, with 400,000 bpd of that still shut in two weeks later. Two of the world's major new refinery projects, Nigeria's giant Dangote refinery, and Mexico's Olmeca refinery, both had unplanned outages on gasoline-producing units in April. Fuel inventories at key hubs have declined this year, creating extra demand for refinery production heading into the peak summer season. Stocks in the OECD region, which includes the U.S., EU and Singapore, fell by 50 million barrels over January-May, according to JPMorgan analysts. "This significant reduction in product stocks has underscored the resilience in product prices," the analysts said. Global fuel demand in the northern hemisphere is highest in summer as motoring and air travel increase. In the Middle East, heavy fuel oil demand peaks in summer to meet cooling demand when temperatures soar. "Strength in the northern hemisphere summer demand growth is where we see some support to margins," said Rystad Energy analyst Janiv Shah. U.S. refining executives have been upbeat on demand, while noting relatively low stocks. "Our current gasoline supply outlook is for those inventories to continue to tighten," Phillips 66 executive vice president Brian Mandell said on the firm's first-quarter earnings call. Marathon Petroleum's domestic and export businesses were seeing steady demand for gasoline, and growth for diesel and jet compared to 2024, CEO Maryann Mannen said on its earnings call. However, analysts have warned that the current strength may soon fade as demand is hit by trade wars, and as fuel production rises as plants look to profit from higher margins. "We have the view that there is a bit of a short-term bump," Wood Mackenzie analyst Austin Lin said. Global oil demand growth is set to average 650,000 bpd for the remainder of 2025, falling from just short of 1 million bpd in the first quarter as trade uncertainty weighs on the global economy, according to the International Energy Agency. "Refiners should be hedging everything now, as I think this is as good as it gets for them," a veteran oil trader, who asked not to be named, added.
Gulf Business
25-02-2025
- Automotive
- Gulf Business
UAE fuel prices: Will they rise or fall for March 2025?
Image credit: Wam Motorists will be carefully watching whether fuel prices in the UAE rise or fall later this week. The UAE Fuel Price Committee always reveals the latest pricing data on the last day of every month, meaning that citizens and residents will know more on February 28. Read- The fuel prices in UAE have been quite stable since the beginning of this year. The UAE announced the retail fuel prices for February 2025, raising the rates by as much as 0.13 fils per litre compared to the month of January 2025. It was from February 1, 2025, that Super 98 petrol cost Dhs2.74 a litre, up from Dhs2.61 a litre in January, while Special 95 will cost Dhs2.63 a litre, compared to Dhs2.50 a litre a month earlier. Petrol prices in January 2025 remained unchanged from December 2024 and were the lowest in the past year. Brent crude futures rose to 38 cents, or 0.5 per cent, to $75.16 a barrel by 0401 GMT. US West Texas Intermediate crude futures gained 47 cents, or 0.7 per cent, to $71.17 a barrel. Both contracts gained in Monday's session after a $2 drop last Friday. The US on Monday put new sanctions on more than 30 brokers, tanker operators, and shipping companies for their role in transporting Iranian oil. President Donald Trump has said he wants to bring crude exports to zero. For now, fuel demand strength in the West is also supportive of oil markets, some analysts say. 'Globally complex refining margins are looking robust, with strong fuel oil and distillates crack, particularly in USGC and NEW benefiting from the heating oil demand from the cold snap,' said Sparta Commodities analyst Neil Crosby in a note, referring to the US Gulf Coast and Northwest Europe. Margins for a typical refinery in Singapore processing regional benchmark Dubai crude averaged $3.5 a barrel in February so far, compared with $2.3 a barrel last month, LSEG pricing data showed. However, gains overall were capped by the uncertain demand outlook. US President Donald Trump said on Monday that tariffs against Canadian and Mexican imports scheduled to start on March 4 are 'on time and on schedule' despite efforts by the two trading partners to address Trump's concerns about border security and fentanyl. Analysts say the tariffs would be bearish for global oil demand growth.
