• 4 minutes Oil Price Editorial: Beware Of Saudi Oil Tanker Sabotage Stories
  • 7 minutes Mueller Report Brings Into Focus Obama's Attempted Coup Against Trump
  • 11 minutes Magic of Shale: EXPORTS!! Crude Exporters Navigate Gulf Coast Terminal Constraints
  • 14 minutes Wonders of Shale- Gas,bringing investments and jobs to the US
  • 1 hour Evil Awakens: Fascist Symbols And Rhetoric On Rise In Italian EU Vote
  • 4 hours Old - New Kim: Nuclear Negotiations With U. S. Will Never Resume Unless Washington Changes Its Position
  • 1 hour Theresa May to Step Down
  • 18 mins Is $60/Bbl WTI still considered a break even for Shale Oil
  • 43 mins IMO 2020 could create fierce competition for scarce water resources
  • 4 hours India After Elections: Economy And Hindu Are The First Modi’s Challenges
  • 49 mins IMO2020 To scrub or not to scrub
  • 5 hours Total nonsense in climate debate
  • 3 hours Apple Boycott in China
  • 36 mins Devastating Sanctions: Iran and Venezuela hurting
  • 9 hours Trump needs to educate US companies and citizens on Chinese Communist Party and People's Liberation Army. This is real ECONOMIC WARFARE. To understand Chinese warfare read General Sun Tzu's "Art of War" . . . written 500 B.C.
  • 12 hours Level-Headed Analysis of the Future of U.S. Shale Oil Industry
  • 3 hours Compensation For A Trade War: Argentina’s Financial Crisis Creates An Opportunity For China
  • 227 days Epic Fail as Solar Crashes and Wind Refuses to Blow
Why Oil Is Still Underpriced

Why Oil Is Still Underpriced

Oil prices are pulled in…

Bearish EIA Data Sends Oil Lower

Bearish EIA Data Sends Oil Lower

Oil fell on Wednesday morning,…

Undeterred By Refinery Losses, Standard Chartered Doubles Down On Energy

Standard Chartered

UK lending giant Standard Chartered Plc announced on Wednesday that it had increased the amount of loans to oil refineries by 24 percent as of the end of June over 2015 levels.

Standard Chartered, who has already seen billions in losses from its energy sector loans, is doubling down in the energy industry to the tune of $7.3 billion in outstanding loans to the oil refinery segment alone.

The lender, who is focused largely on emerging markets and therefore commodities, said their reason for the increase in oil refinery loans was due to the “broadly steady” profit margins during the period, which likely seemed logical, because in late 2014, downstream margins were great thanks to the crash.

Unfortunately, the recent Q2 reporting season shows that the current excess of gasoline stockpiles has caused a deterioration of Q2 refining margins across many players in the industry, including majors such as BP, Exxon Mobil, and Total SA.

For BP, Q2 2016 refining margins were the weakest in six years.

In 2015, Standard Chartered posted more provisions against bad debt than HSBC Holdings, Plc—a bank four times its size—or a staggering 87% increase in bad debts. Then in February 2016, it was announced that Standard Chartered had experienced its first full-year loss since 1989—largely due to the oil price rout.

Related: 6 Signs The Big Global Switch To Solar Has Already Begun

According to Standard Chartered’s annual report for 2015, $9.6 billion of its loans were to oil and gas producers, $7 billion to oil service companies, and $5.9 billion to refineries.

According to its Half Year Report 2016, Standard Chartered said that loan impairment doubled in the first half of 2016 over the last half of 2015, “primarily in the Oil & Gas and Metals & Mining sectors. We are continuing to proactively manage our commodity exposure.”

The report further explains that “89 per cent or $7.2 billion of the net exposure to clients can sustain an oil price of $30 per barrel for 12 months or to global majors or large SOEs.”

By Julianne Geiger for Oilprice.com

More Top Reads From Oilprice.com:



Join the discussion | Back to homepage

Leave a comment

Leave a comment

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