Crude Crisis: European Oil Refining Margins Turn Negative Amid Global Competition
European oil refining margins have turned negative, impacted by rising crude costs and competition from Asian buyers. This trend threatens refinery runs, particularly at simpler refineries lacking advanced upgrading units. IEA data indicates contrasting trends in the U.S. and Asia, where margins have remained stronger.
European oil refining margins have slipped into negative territory, facing stiff competition from Asian markets as crude prices surge due to the Iran conflict. The downturn poses challenges for refineries, potentially forcing them to trim operations, according to IEA data and trade sources.
Light sweet hydroskimming margins in Northwest Europe averaged minus $6.45 a barrel as of early April. Analysts suggest some plants may reduce crude processing due to operating at a loss, especially those lacking capability to produce higher-value products such as jet fuel.
Meanwhile, contrasting trends are seen in the U.S. and Singapore, where margins have been resilient. The competitive landscape and the rising costs of operations, including electricity and natural gas, are squeezing European margins further.
Google News