CHALLENGES FROM GLOBAL SUPPLY
Good times are over for crude oil refiners as margins tighten
The easy times for refiners may be fading rapidly, writes Joachim Breidenthal
While much of the upstream sector has struggled mightily since crude oil prices began collapsing in the summer of 2014, refiners have enjoyed a period of relative prosperity. Falling crude prices buoyed refiners’ margins, even as upstream producers trimmed costs and strained the capacities of their suppliers. But the easy times for refiners may be fading rapidly. Margins have already tightened as crude oil prices stabilised and refiners began to pass their savings on to customers. In the next few years, refiners will have to cope with several long-term challenges sure to separate leaders from laggards and likely to force some poor performers from the field. Challenges include the global supply of crude getting heavier and more sour, as well as unstable supplies from North Africa and the Middle East, with fading production from the North Sea. These have led to volatility in pricing, forcing refiners to adjust feedstocks more frequently and drastically than in the past and making long...
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