Demand plummets, prices plunge, global oil refining industry reduce production

Oil prices plunge hard to make money

Earlier, Reuters reported that oil refineries in many countries are no longer profitable due to the sharp drop in refined oil prices. According to data recently compiled by S & P Global Platts, in the past week, as global demand for refined oil has not yet shown signs of recovery, oil refinery manufacturers in Europe, North America and other regions have continued to reduce production.

With more and more countries issuing "blockade orders", oil refining companies may choose to reduce equipment utilization, or no longer start construction after annual maintenance, or even stop production directly, the scale of production reduction in the oil refining industry is showing an expanding trend.

According to ExxonMobil official news, the company's refineries in France, Germany, Portugal, Spain and Italy have announced production cuts. At the same time, many refineries in the Netherlands, Italy, Finland, Norwayand other countries also announced the suspension of production activities.

It is also understood that in late March this year, European refined oil prices have fallen to historical lows, and refining profit margins have continued to decline. The data shows that, taking into account factors such as production cuts, shutdowns or maintenance, from April this year, the refining capacity of Northwest Europe is expected to be reduced by 180,000 barrels per day.

Global oil refining industry is busy reducing production

United States

Energy companies, including ExxonMobil and BP, have recently indicated that they will lower the utilization rate of US refineries.

BP has recently reduced the utilization rate of the company's three largest refineries in the United States; ExxonMobil has also reduced the utilization rate of the company's second largest refinery in the United States.

Africa

Oil refiners in South Africa, Chad and other countries also announced production cuts due to a sudden drop in demand. It is understood that South Africa has implemented a “stoppage blockade” across the country since the end of March, and the demand for refined oil has plummeted.

The country ’s largest Sapref refinery said it will adjust production in the future based on market demand.

Asia

Oil refiners in major economies such as India, Japan, and South Korea have also announced production cuts.

The data shows that because India will extend the national "blockade" time limit, the Indian oil company has cut the output of most of its refineries by 25% -30%, and adjusted the company's product structure.

Major oil refiners in Japan and South Korea also indicated that they will continue to cut output in April due to weakened demand.

In addition, as of now, Malaysia, Thailand, Pakistan and other countries have required local oil refining enterprises to reduce production, and even required local governments to take mandatory restrictions on crude oil imports.

It is worth mentioning that S & P Global Platts pointed out that at present, China has been able to see certain signs of recovery in refined oil demand, and the operating rate of major Chinese oil refining companies has rebounded.

the Middle East

The Kuwaiti National Petroleum Corporation announced that it will shut down the atmospheric residual oil desulfurization unit in its Mina Al-Ahmadi refinery from early April.

It is difficult for countries to restore oil refining capacity in the short term
The IEA believes that after the second quarter of this year, the refined oil reserves of all countries in the world are expected to rise to a certain level, and it is difficult to have more storage space for refined oil. Refining manufacturers currently suspended or reduced in production have little hope of resuming production in the next few months. In the short term, it will be difficult for countries to restore their oil refining capacity as usual.

For refining companies, to avoid skyrocketing refined oil inventories, the global refining capacity needs to fall below 60 million barrels per day.

The IEA pointed out that the events that occurred this year are "unprecedented." Although the crisis caused by the New Coronary Pneumonia epidemic is somewhat similar to the situation of the global economic recession in the 1980s, the last global economic recession has had a "far-reaching impact on the oil refining industry and the oil and gas industry as a whole." Andthe development is more rapid ", the impact will be more difficult to predict.

The analysis pointed out that the biggest challenge facing the oil refining industry is still the continuous reduction in global demand. The “home segregation order” of residents in various countries has caused global gasoline prices to be hit hard.

It is worth noting that the IEA emphasized that shutting down an oil refinery requires a strict plan. During the shutdown, major oil refineries still need to closely monitor equipment conditions to avoid other accidents.