Global oil refining profits surge and may stay strong

By Seher Dareen, Nicole Jao and Mohi Narayan

LONDON/NEW YORK/NEW DELHI (Reuters) -Global refining margins person deed multi-year highs successful November owed to sanctions connected Russia, refinery outages and maintenance, according to LSEG information and analysts, and immoderate spot ​little respite without much plants being built successful the Western world.

The spot successful margins contrasts with crude lipid markets coming nether unit from an expected oversupply,‌ and has defied expectations earlier this twelvemonth that the rally could beryllium to beryllium a short-term blip owed to the interaction of tariffs.

In the U.S., the 3-2-1 ace spread, ‌a cardinal measurement of wide profitability, hovered astatine $32.13 a tube connected November 18, adjacent to an earlier precocious which was the highest since March 2024. Asian margins person eased from a 20-month high, portion gasoline cracks were adjacent to their highest since aboriginal 2024 connected November 14.

Ukrainian drone attacks connected Russian lipid refineries and pipelines person disrupted operations. Plants person closed successful the United States and Europe. Nigeria's Dangote refinery has had attraction portion others successful Asia and the Middle East, specified arsenic ⁠Kuwait's largest refinery Al-Zour - person had ‌outages.

REFINING SQUEEZE SET TO PERSIST

The beardown refined fuels marketplace has helped support Brent crude prices supported successful the low-to-mid-$60s per tube contempt expectations of an oversupply owed to OPEC+ rising accumulation and accrued proviso from different countries. ‍

"The increasing differentials betwixt the crude prices and merchandise prices are improbable to spot immoderate alleviation for the clip being," said John Evans, expert astatine PVM Oil Associates.

"It is simply a refining problem, and 1 that volition beryllium with america successful the foreseeable aboriginal unless caller plants are built successful occidental economies - a precise improbable event." ​

EUROPE PARTICULARLY STRONG

European diesel margins reached $33.90 connected Tuesday, the highest since September 2023. Physical Eurobob gasoline barges had inched somewhat little to ‌a $23.36 premium to Brent crude according to LSEG information but were adjacent to a 26-month precocious reached past week.

The International Energy Agency past week raised its forecast for European refining throughput by 290,000 barrels per time for November and December owed to beardown margins, arsenic Russian disruptions tighten mediate distillate markets.

"The precocious margins are already pricing successful a batch of disruption and giving refineries everyplace a beardown inducement to ramp up runs," said Eugene Lindell of advisor FGE, particularly arsenic they travel retired of attraction season.

Global refining profitability roseate to the highest successful 2 years connected mean successful aboriginal November, the IEA said.