Refining: Low Margins Force Refiners to Scale Back Crude Runs

The global refining industry is sending blatant signals that oil demand is not growing as expected. Margins and refinery throughput show an industry split on two tracks. On one track, independent refiners and downstream units of international majors and national oil companies outside Asia are seeing profitability drop and now performing as they did before recent turbulent years. This group shows industry normalization after refiners were whacked by Covid-19, but then benefited from Russia’s invasion of Ukraine. Track two is Asia, especially China, where runs and profitability are imploding despite the availability of cheap barrels from Russia, Iran and Venezuela. There the immediate future looks bleak.