Save time by listening to our audio articles as you multitaskIn normal times, the refining business is a low-margin, low-drama adjunct to the geopolitically charged upstream business of oil production and the politically charged downstream business of retail sales. —the machinations of the oil-producing countries, war in Ukraine and sanctions on Russian oil exports notwithstanding. Margins for many refiners have rocketed, and bottlenecks in the sector are propelling global petrol prices upwards.
The second factor that has roiled the refining business is Chinese policymaking. China has historically been a net exporter of refined products, sending large volumes to other Asian countries. In an attempt to fight local pollution and help meet climate targets, however, officials have cut export quotas for big refiners of gasoline, jet fuel and other products by more than 50% this year. On official plans, China is set to stop exporting most carbon-intensive refined products altogether by 2025.
When it comes to refined products, though, both official sanctions and the voluntary “self sanctions” embraced by Western firms seem to be biting. According to Natasha Kaneva of JPMorgan Chase, a bank, Russia is selling roughly 500,000 fewer barrels of refined product a day than it was before the war, and may have been forced to shut down as much as 1.4m bpd of refining capacity in May.
Gee. I guess Biden is CEO of all the oil refiners too.
Make hay while the sun shines