Smarter News Now
  • About Us
  • Privacy Policy
  • Terms & Conditions
  • Contact Us
  • Email Whitelisting
No Result
View All Result
  • Top News
  • Economy News
  • Forex News
  • Investing News
  • Stock News
  • Politics News
  • Editor’s Pick
  • Top News
  • Economy News
  • Forex News
  • Investing News
  • Stock News
  • Politics News
  • Editor’s Pick
No Result
View All Result
Smarter News Now
No Result
View All Result
Home Investing News

Why is there a worldwide oil-refining crunch?

by
June 23, 2022
in Investing News
0
Why is there a worldwide oil-refining crunch?
0
SHARES
11
VIEWS
Share on FacebookShare on Twitter
RAWPIXEL

Drivers around the world are feeling pain at the pump with fuel prices soaring, and costs are surging for heating buildings, power generation, and industrial production. 

Prices were already elevated before Russia invaded Ukraine on Feb. 24. But since mid-March, fuel costs have surged while crude prices are up only modestly. Much of the reason is a lack of adequate refining capacity to process crude into gasoline and diesel to meet high global demand. 

HOW MUCH CAN THE WORLD REFINERIES PRODUCE DAILY? 

Overall, there is enough capacity to refine about 100 million barrels of oil a day (bpd), according to the International Energy Agency (IEA), but about 20% of that capacity is not usable. Much of that unusable capacity is in Latin America and other places where there is a lack of investment. That leaves somewhere around 82–83 million bpd in projected capacity. 

HOW MANY REFINERIES HAVE CLOSED? 

The refining industry estimates that the world lost a total of 3.3 million barrels of daily refining capacity since the start of 2020. About a third of these losses occurred in the United States, with the rest in Russia, China, and Europe. Fuel demand crashed early in the pandemic when lockdowns and remote work were widespread. Before that, refining capacity had not declined in any year for at least three decades. 

WILL REFINING PICK UP? 

Global refining capacity is set to expand by 1 million bpd per day in 2022 and 1.6 million bpd in 2023. 

HOW MUCH HAS REFINING DECLINED SINCE BEFORE THE PANDEMIC? 

In April, 78 million barrels were processed daily, down sharply from the pre-pandemic average of 82.1 million bpd. The IEA expects refining to rebound during the summer to 81.9 million bpd as Chinese refiners come back online. 

WHERE IS MOST REFINING CAPACITY OFFLINE, AND WHY? 

The United States, China, Russia and Europe are all operating refineries at lower capacity than before the pandemic. U.S. refiners shut nearly one million bpd of capacity since 2019 for various reasons. 

Nearly 30% of Russia’s refining capacity was idled in May, sources told Reuters. Many Western nations are rejecting Russian fuel. 

China has the most spare refining capacity, refined product exports are only allowed under official quotas, mainly granted to large state-owned refining companies and not to smaller independent companies that hold much of China’s spare capacity. 

As of last week, run rates at China’s state-backed refineries averaged around 71.3% and independent refineries were around 65.5%. That was up from earlier in the year, but low by historic standards. 

WHAT ELSE IS CONTRIBUTING TO HIGH PRICES? 

The cost to carry products on vessels overseas has risen due to high global demand, as well as sanctions on Russian vessels. In Europe, refineries are constrained by high prices for natural gas, which powers their operations. 

Some refiners also depend on vacuum gasoil as an intermediate fuel. Loss of Russian vacuum gas oil has prevented certain from restarting certain gasoline-producing units. 

WHO IS BENEFITING FROM THE CURRENT SITUATION? 

Refiners, especially those that export a lot of fuel to other countries, such as U.S. refiners. Global fuel shortages have boosted refining margins to historic highs, with the key 3-2-1 crack spread nearing $60 a barrel. That has driven big profits for U.S.-based Valero and India-based Reliance Industries 

India, which refines more than 5 million bpd, according to the IEA, has been importing cheap Russian crude for domestic use and export. It is expected to boost output by 450,000 by year-end, the IEA said. 

More refining capacity is set to come online in the Middle East and Asia to meet growing demand. — Laura Sanicola/Reuters

ShareTweetPin

Related Posts

Stocks decline on profit taking, recession fears
Investing News

Stocks decline on profit taking, recession fears

August 23, 2022
Peso climbs vs dollar as RTB offer starts
Investing News

Peso climbs vs dollar as RTB offer starts

August 23, 2022
PNR cancels bids for 3 projects after finding them ‘non-feasible’
Investing News

PNR cancels bids for 3 projects after finding them ‘non-feasible’

August 23, 2022
Senate grills Rodriguez on approval procedures for sugar import order
Investing News

Senate grills Rodriguez on approval procedures for sugar import order

August 23, 2022
Trade dep’t expecting sugar price monitoring report by Friday
Investing News

Trade dep’t expecting sugar price monitoring report by Friday

August 23, 2022
Fisherfolk seek halt to reclamation on municipal fisheries
Investing News

Fisherfolk seek halt to reclamation on municipal fisheries

August 23, 2022
Next Post
Some Brits turn to gambling, crypto to make ends meet, charity warns

Some Brits turn to gambling, crypto to make ends meet, charity warns

Get the daily email that makes reading the news actually enjoyable. Stay informed and entertained, for free.
Email Address *
Your information is secure and your privacy is protected. By opting in you agree to receive emails from us. Remember that you can opt-out any time, we hate spam too!
 

Recommended

Iloilo City to launch e-payment soon for business permits 

Iloilo City to launch e-payment soon for business permits 

August 17, 2022
How Online Gambling Has Changed Under the Influence of Modern Technologies

How Online Gambling Has Changed Under the Influence of Modern Technologies

June 15, 2022
Top Frontier maps expansion, plans expressways

Top Frontier maps expansion, plans expressways

July 10, 2022
CHR urges gov’t to set up mechanisms to protect human rights workers 

CHR urges gov’t to set up mechanisms to protect human rights workers 

August 8, 2022
Axelum Resources Corp. to conduct annual stockholders’ meeting on July 29 via remote communication

Axelum Resources Corp. to conduct annual stockholders’ meeting on July 29 via remote communication

June 27, 2022
Game of Thrones prequel meets Targaryens at height of power

Game of Thrones prequel meets Targaryens at height of power

July 25, 2022
  • About Us
  • Privacy Policy
  • Terms & Conditions
  • Contact Us
  • Email Whitelisting

Copyright © 2022 SmarterNewsNow.
All Rights Reserved.

Disclaimer: SmarterNewsNow.com, its managers, its employees, and assigns (collectively “The Company”) do not make any guarantee or warranty about what is advertised above. Information provided by this website is for research purposes only and should not be considered as personalized financial advice.
The Company is not affiliated with, nor does it receive compensation from, any specific security. The Company is not registered or licensed by any governing body in any jurisdiction to give investing advice or provide investment recommendation. Any investments recommended here should be taken into consideration only after consulting with your investment advisor and after reviewing the prospectus or financial statements of the company.

No Result
View All Result
  • About Us
  • Contact Us
  • Email Whitelisting
  • Home
  • Privacy Policy
  • Terms & Conditions
  • Thank You

Copyright © 2020 SmarterNewsNow. All Rights Reserved.