• 4 minutes Is The Three Gorges Dam on the Brink of Collapse?
  • 8 minutes The Coal Industry May Never Recover From The Pandemic
  • 11 minutes China Raids Bank and Investor Accounts
  • 5 hours In a Nutshell...
  • 7 hours During March, April, May the states with the highest infections/deaths were NY, NJ, Ma. . . . . Today (June) the three have the best numbers. How ? Herd immunity ?
  • 8 hours Is OilPrice a cover for Green Propganda
  • 5 mins Why Wind is pitiful for most regions on earth
  • 12 hours Putin Paid Militants to Kill US Troops
  • 2 days Victor Davis Hansen on Biden's mental acuity " . . unfit to serve". With 1 out of 5 Democrats admitting it. How many Dem's believe it but will not admit it?
  • 1 day Putin Forever: Russians Given Money As Vote That Could Extend Putin's Rule Draws To A Close
  • 7 hours Joe Biden to black radio host, " If you don't vote for me you ain't black". That's our Democratic Party nominee ?
  • 1 day Happy 4th of July!
  • 2 days Tesla Model 3 police cars pay for themselves faster than expected, says police chief
  • 1 day Apology Accepted!
  • 2 days The Political Genius of Donald Trump
  • 3 days Per most popular Indian websites it was Indian troops not Chinese troops breach of LAC that caused the clashes. If you know any Indian media that claim to the contrary please provide the link
Julianne Geiger

Julianne Geiger

Julianne Geiger is a veteran editor, writer and researcher for Oilprice.com, and a member of the Creative Professionals Networking Group.

More Info

Premium Content

Oil Suppliers Slash Prices To Save Asian Market Share

As the coronavirus continues to take a toll on oil markets, competition is heating up for crude oil suppliers—all of which are vying for a piece of the dwindling oil demand in China and Japan as refineries there cut their run rates.

Crude oil suppliers are now slashing prices for certain grades of crude oil, according to refinery officials and trading managers who spoke to S&P Global Platts. The difference in some cases are multiple dollars per barrel for April loadings compared to March loadings.

China’s Mega Refiners Make Drastic Cuts

Thousands of flights have been cut into and out of China, and travel within certain areas of the country have also been restricted. As a result of these restrictions and on reduced industrial throughput, fuel demand from the otherwise oil-thirsty nation continues to sink.

As China’s demand for fuel wanes, refiners are faced with a grim reality—it might be some time before demand picks back up—so it’s best to settle in and get comfortable. That comfort has come in the form of cutting run rates.

China Petroleum & Chemical Corporation, or Sinopec, Asia’s largest refiner, cut its refinery production by 600,000 barrels per day this month. This is a 12% cut of its 5 million bpd average that it saw in 2019.

PetroChina, China’s second largest refiner, has also cut refinery runs, by 320,000 barrels per day PetroChina has also asked Saudi Arabia, the UAE, and Kuwait about the possibility of deferring its crude oil loadings or reducing volumes. This volume equates to about 10% of its 3.32 bpd of fuel production.  

Related: Shale Gas Drillers Are Facing A Perfect Storm

Independent refiners in China are also cutting run rates, with many operating at even less than half capacity. The independents are in the unfortunate position of not being able to export fuels—unlike the state-held refinery giants such as Sinopec and PetroChina. IN Shandong province, independents have said that they have collectively shut in 795,000 bpd of refinery runs, according to S&P Global Platts.

Altogether, IHS Market has estimated that China’s February refinery runs will take a 1.7 million bpd hit—compared to its previous expectation that refinery runs in China would increase by 760,000 bpd.

Related: The Coronavirus May Mark The End Of Russia-OPEC Cooperation

But the pain extends beyond China. Japan refiners, too, are cutting run rates by between 3-4% from the last week of January to the first week of February.

The Trickle-Down Effect

As these refiners cut back their runs in a big way, naturally they will have a reduced need for crude oil, and suppliers in Brazil, Russia, and Angola are having to adjust to stay at the top of the pile as the Asian refiners look to take less crude.

Brazil’s Lula crude grade, according to Platts, was trading at a $3 premium to dated Brent for April delivery this week, compared to a $4 premium last week—and compared to an $8.50 per barrel premium for March delivery.    Related: Asia’s Demand For Middle East Oil Plunges On Coronavirus Outbreak

Angola’s Pazflor grade traded at a premium of just $0.20 to dated Brent for March loading cargo, compared to a $2 premium for February loadings.

One shipment of Russia’s Sokol crude for April 8-14 loading sold at a premium of $4.30 per barrel to Platts Dubai crude, while March loadings were trading at a premium upwards of $8 per barrel. In October, in the wake of the embargo on Chinese tankers, it was trading at a premium of $9.

The number of coronavirus cases had claimed 1,357 lives as of Thursday, with the total number of confirmed cases rising to more than 60,000—with a sharp increase in the number of new cases reported on Wednesday.

Despite the sour note oil prices were trading modestly up on Thursday, even as Russia and OPEC have not yet come to an agreement as to how they will handle the depressed demand. 

By Julianne Geiger for Oilprice.com

More Top Reads From Oilprice.com:


Download The Free Oilprice App Today

Back to homepage





Leave a comment
  • John Scior on February 17 2020 said:
    Less Demand+lower gasoline prices. This leads to less demand for EV's and alternative fuels. Also big boost to US Economy.

Leave a comment




Oilprice - The No. 1 Source for Oil & Energy News