The profitability of oil refiners in Asia, Europe, and the US is falling to multi-year lows, signalling a slump for a sector Global that had seen explosive returns during the epidemic and highlighting the severity of the present dip in demand around the world.
The weakness is an additional indicator of weak industrial and consumer demand, particularly in China where economic growth is slowing and the number of electric vehicles on the road is increasing. The pressure has decreased due to the addition of new refineries in Asia, the Middle East, and Africa.
Refiners like TotalEnergies and traders like Glencore made enormous profits in 2022 and 2023 by profiting from supply bottlenecks brought on by Russia’s invasion of Ukraine, Houthi insurgents’ obstruction of Red Sea navigation, and a significant uptick in demand after the COVID-19 epidemic.
“It’s certainly looking like the refining supercycle that we’ve experienced over the past few years may now be coming to an end, with supply from newly inaugurated refineries finally catching up with slower-growing fuel demand,” Rory Johnston, an analyst at Commodity Context, stated.
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