Oil Daily | Refining Margins Plummet as New Capacity and Low Demand Hit Global Markets

【Global Oil Supply and Demand】

The refining industry's supercycle of high profits is ending due to weaker demand in China, new refining capacity in the Middle East and Africa, and low demand in developed economies. European and Asian refiners face multi-year low margins, with potential run rate curbs, especially in China.

Chinese refiners struggle with declining margins, cutting run rates to preserve profits. Fuel export quotas for the year remain unchanged. Some refiners face bankruptcy due to falling margins. Gasoline exports from China dropped significantly, and apparent oil demand is down.

A fire at Greece's Agioi Theodoroi refinery disrupted operations. Despite damage, the facility operates at over 50% capacity, mitigating a full shutdown. The disruption adds pressure on European refining capacity amid global supply sensitivities.

【Oil-Producing Countries Dynamics】

Massive new refineries in Nigeria, Kuwait, and Oman impact smaller refineries, particularly in Europe. Scotland's Grangemouth refinery will close by 2025, unable to compete with these new complexes.

【Latest Oil Policies】

Germany's Uniper warns of a need for tenders for new natural gas capacity to replace coal plants by 2030. This aligns with Germany's plan to phase out coal and boost renewable energy, despite concerns of new LNG capacity becoming stranded assets.

Germany is pushing for tenders for new natural gas capacity as it aims to phase out coal by 2030. Uniper plans to build gas plants convertible to hydrogen. The German government has pledged significant investment in green energy.

【Industry News】

Oil and gas companies can cut emissions by up to 86% by electrifying platforms, according to Rystad Energy. Norway's electrified production assets show a substantial drop in emissions. Electrification aligns with global sustainability goals.

【Company News】

ConocoPhillips and Uniper signed a natural gas supply deal for 10 billion cu m annually over ten years. The agreement supports increased gas flows into Europe, aligning with Germany's long-term energy plans.

Shell's sale of its Schwedt refinery stake faces delays due to lawsuits. Rosneft attempts to prevent the sale after losing control to Germany. Poland reassures it can supply the refinery if Kazakh oil is disrupted.

【Others】

The Netherlands' ING bank halts new financing for upstream oil and gas companies developing new fields and plans to stop financing new LNG terminals after 2025, aiming to accelerate the global transition to a low-carbon economy.

Battery electric vehicle registrations in the EU fell by 44% in August. ACEA calls for urgent action to reverse the trend, citing missing infrastructure and incentives. Major carmakers are scaling back EV production amid overcapacity concerns.