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Global refining throughput is set to jump this summer to meet rebounding demand, the International Energy Agency (IEA) said on Tuesday.
Refinery runs globally surged by as much as 1.6 million barrels per day (bpd) in June, up from a stagnant performance in May, the agency said in its Oil Market Report for July published today.
After the June jump, which was the largest monthly increase since July 2020 as per Reuters estimates, refinery runs are expected to further jump through July and August.
The increase over this month and next is expected at another 2.7 million bpd from June levels, the IEA said.
After August, the Paris-based agency expects a seasonal slowdown in refining throughput in the fourth quarter of 2021.
“The sharp increase in June was partly behind higher crude oil prices in the month that negatively affected product cracks and refinery margins,” the agency said.
Although refinery throughput will jump this summer, runs in Q4 will still be lower than the peak in 2018, the IEA said in the report, as carried by Reuters.
The agency believes that global refining rates will not return to the 2018 levels until the end of 2022. Europe’s refineries would be slower to return to pre-COVID utilization rates, while China will benefit from this, the IEA said.
The agency also warned in its report today that the oil market is on edge, entertaining the possibility of a new price war within the OPEC+ alliance. The possibility of a new pump-at-will war for market share is currently assessed as remote, but the ongoing impasse at the group over production quotas is also threatening to derail the global economic recovery, the IEA said.
“[T]he possibility of a market share battle, even if remote, is hanging over markets, as is the potential for high fuel prices to stoke inflation and damage a fragile economic recovery. The uncertainty over the potential global impact of the Covid-19 Delta variant in the coming months is also tempering sentiment,” the IEA’s monthly report says.
By Tsvetana Paraskova for Oilprice.com
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Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews.