<\/p>\n
The Valero Houston refinery. Valero Energy Corp. and Turkiye Petrol Rafinerileri AS have seen stellar rises, while Orlen SA gained more than 100% year-to-date.<\/p>\n
(Bloomberg) — It\u2019s a great time to be an oil refiner \u2014 but a less great time to be filling up at the pump.<\/p>\n
Most Read from Bloomberg<\/p>\n<\/p>\n
In Europe, the US and Asia, giant plants are making money by doing what they\u2019ve always done: converting crude oil into vital fuels and selling them at a profit.<\/p>\n
What\u2019s different today is the scale of the threat to global supplies: Relentless attacks on Russia\u2019s energy infrastructure, outages at key plants in Asia and Africa and permanent closures across Europe and the US have removed millions of barrels of diesel and gasoline from the world market.<\/p>\n
On top of these real-world impacts are traders\u2019 fears of what\u2019s yet to come: imminent US sanctions on Lukoil PJSC and Rosneft PJSC and fresh European Union curbs on fuels made from Russian crude threaten already squeezed supply-chains.<\/p>\n
The result is ongoing pressure on costs at the pump despite a fall in global oil prices \u2014 something that\u2019s unlikely to sit well with a US administration that sees \u201caffordable energy\u201d as essential.<\/p>\n
\u201cGlobal refinery margins are astronomical,\u201d said Eugene Lindell, head of refined products at consultancy FGE NexantECA. \u201cThe signal you\u2019re giving the global refining system, no matter where the refinery is located, is to just run flat out.\u201d<\/p>\n
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In the US, Europe and Asia, margins are the highest they\u2019ve been at this time of year since at least 2018, according to fair value data compiled by Bloomberg. The profits are so good that refiners\u2019 stock prices are also surging: processors including Valero Energy Corp. and Turkiye Petrol Rafinerileri AS have seen stellar rises, while Orlen SA gained more than 100% year-to-date.<\/p>\n
While expectations of a glut are dragging on crude prices, disruption to the global refining system is limiting how much oil can be turned into products like gasoline, diesel and jet fuel. While that benefits the processors still running, it also means the slump in headline oil prices isn\u2019t being felt at the pump.<\/p>\n
READ: Russia\u2019s Sliding Oil Flows and Prices Strain Putin\u2019s War Chest<\/p>\n
A constant stream of attacks on Russia\u2019s refineries \u2014 just this month, Ukraine claimed strikes on the Saratov, Orsk and Volgograd plants \u2014 is hampering fuel production. Last month, Russia\u2019s huge oil product exports were on course to hit a multi-year low, and that was before drone attacks damaged key loading facilities in the port city of Tuapse.<\/p>\n
Story Continues <\/p>\n
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Product supplies are being further squeezed by outages elsewhere. In Kuwait, the giant 615,000 barrel-a-day Al-Zour refinery recently had only one of its three crude processing units operating, while a key gasoline-production unit at Nigeria\u2019s huge Dangote refinery is reportedly scheduled to halt for about 50 days of maintenance in coming weeks, having only recently begun restarting.<\/p>\n
Meanwhile, US crude runs in recent weeks have been more than a million barrels a day lower than the same time last year, a huge drop from the peak summer demand months, when processing was at its highest seasonal level since 2019. The country has seen multiple refinery closures in recent years, as has western Europe, further pressuring fuel supplies.<\/p>\n
\u201cGlobal refining activity has been challenged by a series of unplanned outages in October, further constraining product markets and pushing margins even higher,\u201d the International Energy Agency said Thursday. Increased profits have prompted the watchdog to raise its estimates for runs at margin-sensitive refining assets in Europe and Asia this month and next.<\/p>\n
See also: Russia\u2019s Sliding Oil Flows and Prices Strain Putin\u2019s War Chest<\/p>\n
In the US, the upshot is a rise in the average price of diesel since President Trump took office, and little change in the cost of gasoline, which on Thursday stood at $3.08 a gallon. Benchmark crude futures have meanwhile come off about 20% since his second inauguration, amid forecasts of a large surplus.<\/p>\n
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Supercharging these ongoing real-world supply pressures are traders\u2019 fears over what\u2019s on the horizon.<\/p>\n
\u201cThe current strength in refining margins is at least partially being driven by uncertainty around the upcoming US sanctions on Rosneft and Lukoil, as well as the EU\u2019s January prohibitions on Russian products,\u201d said Rebecca Babin, a senior energy trader at CIBC Private Wealth Group.<\/p>\n
FGE\u2019s Lindell estimates Lukoil and Rosneft\u2019s combined Russia oil product exports are more than 800,000 barrels a day. The global seaborne trade in oil products is about 22 million barrels a day, according to Clarkson Research Services Ltd., a unit of the world\u2019s largest shipbroker.<\/p>\n
Any major disruption to those exports would be a shock to the global fuels market, though the extent to which those barrels would really disappear is unclear. Russia has shown that it often manages to work around sanctions.<\/p>\n
There are also questions about what comes next for refineries outside Russia in which Lukoil is involved, including Bulgaria\u2019s Burgas facility, the Netherlands\u2019 Zeeland plant and Romania\u2019s Petrotel.<\/p>\n
Then there are the EU restrictions, coming into force January 21, which restrict the delivery of petroleum products made from Russian crude into the bloc. Precisely how these will end up impacting Europe\u2019s diesel supplies from India and Turkey \u2014 both of which have also been key importers of Russian crude \u2014 remains to be seen.<\/p>\n
\u201cThe sanctions against Rosneft and Lukoil, on top of the recent sanctions package out of the EU, tightened the noose around Russia\u2019s neck,\u201d said Carolyn Kissane, an associate dean at the Center for Global Affairs at New York University, where she teaches about energy and climate change. \u201cAt the same time, you\u2019re seeing more attacks driven by Ukraine against Russian infrastructure, which is a hit to the products market.\u201d<\/p>\n
–With assistance from Alex Longley and Rachel Graham.<\/p>\n
Most Read from Bloomberg Businessweek<\/p>\n
\u00a92025 Bloomberg L.P.<\/p>\n","protected":false},"excerpt":{"rendered":"The Valero Houston refinery. Valero Energy Corp. and Turkiye Petrol Rafinerileri AS have seen stellar rises, while Orlen…\n","protected":false},"author":2,"featured_media":264420,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[11],"tags":[4056,84,1294,3712,591,109216,154,56,54,55,72990,109215,90703],"class_list":{"0":"post-264419","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-economy","8":"tag-bloomberg","9":"tag-business","10":"tag-economy","11":"tag-energy-infrastructure","12":"tag-europe","13":"tag-oil-refiner","14":"tag-russia","15":"tag-uk","16":"tag-united-kingdom","17":"tag-unitedkingdom","18":"tag-valero-energy-corp","19":"tag-valero-houston-refinery","20":"tag-world-market"},"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/posts\/264419","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/comments?post=264419"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/posts\/264419\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/media\/264420"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/media?parent=264419"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/categories?post=264419"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/tags?post=264419"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}