Wide divergence between gasoil and petrol margins to persist until 2023 – P66

Singapore: Profit margin divergence between gas oil and gasoline refiners will persist until mid-2023. That’s because the European Union’s ban on Russian oil will boost profit margins on industrial fuels, industry analysts said Wednesday.

Sri Parabaikaras, director of market analysis at Phillips 66, told the Asia-Pacific Petroleum Conference (APPEC) forum, “It will be a very difficult phase of rebalancing once the ban comes into full effect, and gas oil margins will continue to rise. will do,’ he said.

Refiners are struggling to meet the additional demand for gasoil in the winter, and gasoline will be dumped on the market as a by-product after the summer driving demand season is over, she added.

Gasoil is underpinned by tight global supplies as exports from Russia have declined as a result of the Ukraine war, while gasoline consumption is sluggish as high fuel prices curtail demand for motor fuel. pressured.

Gasoline cracks have more than doubled against Dubai crude since the Russian and Ukrainian crises began in February, to $32.57 a barrel. Meanwhile, gasoline margins fell more than 96% to Brent crude to 43 cents a barrel. Divergence varies with seasonal demand cycles, but is typically much narrower.

Naphtha margins reversed to a discount of $1.65/t against Brent crude, down more than 100% over the same period.

Russia’s exports may fall further as the EU bans imports of Russian petroleum products from February 5.

P66’s Paravaikkarasu added that Asian refiners may not be able to produce enough gasoil to meet winter specifications for their products in some European countries.

“This is not just a matter of molecular rearrangements. Many refineries in the East are unable to meet European gasoline winter specifications,” she said.

(Written by Mohi Narayan, edited by Jacqueline Wong)