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Refining operations in Europe and elsewhere in the world are being curtailed as gasoline and jet fuel demand is falling off a cliff due to the enormous demand destruction in the spreading coronavirus pandemic.
In Europe, oil majors are shutting down refinery units as major economies are under lockdown and flights are severely restricted, Reuters reported on Friday, quoting sources and industry data provider Genscape.
“Horrendous margins and even worse physical markets,” a source familiar with the operations of INEOS’s refinery in Grangemouth in the UK told Reuters.
Earlier this week, INEOS shut down the 35,000 barrels per day crude unit at the refinery, according to Genscape data cited by Reuters.
BP, for its part, is said to have shut the 70,000-bpd crude processing unit at its refinery in Gelsenkirchen in Germany. In France, Total is delaying the restart of a 102,000 bpd refinery close to Paris after a planned maintenance, Thierry Defresne, a delegate for the CGT union, told Reuters.
Across Europe, lockdowns in Italy, Spain, and France are crushing oil demand and German traffic is down 40 percent, Giovanni Serio, head of research at the world’s largest independent oil trader Vitol, told Reuters on Friday. If the UK takes more measures to curb domestic travel, around 40 percent of Europe’s 7-million-bpd demand is at risk, Serio told Reuters.
Global oil demand is set to plunge by more than 10 percent from the typical 100-million-bpd consumption, as the raging coronavirus pandemic forces countries into lockdown, the executive said.
Falling demand, including jet fuel demand, may force Japanese refiners to cut run rates, Takashi Tsukioka, president of the Petroleum Association of Japan (PAJ), said on Thursday. Japanese refiners are stocked with crude for April and don’t have much room to take extra barrels from Saudi Arabia, regardless of how cheap the flood of additional supply will be, Tsukioka told a news conference, as quoted by Reuters.
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.
The ripple effect of the crashed oil price will be affecting too many countries.