Asian refiners want OPEC+ to maintain production cuts

Asian refiners want OPEC+ to maintain production cuts to ensure stable oil prices and refining margins
Stabilité Prix Pétrole OPEC+

Partagez:

Asian refiners express their preference for an extension of OPEC+ production cuts to the end of 2024. Stable oil prices and refining margins are their main concerns, rather than security of crude supply. Geopolitical tensions in the Middle East and prolonged OPEC+ production cuts have not caused shortages of crude or raw materials in Asia.

Impact of geopolitical conflicts

Geopolitical conflicts involving Israel and Iran, as well as sanctions against Russia and Iran, have not disrupted crude supplies to Asian refineries. Product marketing managers, raw materials managers and refinery representatives in Thailand, Japan, South Korea, China and India stress the importance of stable oil prices and refining margins.

Outlook for Asian refiners

For Asian refiners, the ideal outcome of the OPEC+ ministerial meeting on June 2 would be to maintain the current production cut. Any surprise price spike in the second half of the year could hurt oil demand and refining margins in Asia.

High refining margins

Refining margins and inventory valuations are major concerns for Asian refiners. Lower oil prices do not necessarily favor Asian refineries, as they can lead to losses in inventory valuation and negatively affect product sales margins. Price stability is therefore essential to maintain healthy refining margins.

Economic performance and challenges

Economic activity in Asia has been weaker than expected this year, putting pressure on light and middle distillate spreads. Demand for industrial fuel in Asia is weak, resulting in lower cracking margins for diesel and jet fuel. Domestic refining margins and export margins in South Korea have been in decline since February.

Risk management strategies

Asian refiners, including Bharat Petroleum Corp. Ltd, Thai Oil, ENEOS and S-Oil, hope that OPEC+ will maintain a strict production control strategy to balance supply and demand. Although Asian refiners have no major crude supply security problems, they rely on stable prices and margins to effectively plan their operations and market strategies.

Security of supply considerations

Asian refinery managers say they have no problem securing monthly barrels from major Persian Gulf suppliers. OPEC+ cuts have never caused a shortage in crude supplies to Asian refiners, thanks in large part to the large volumes of Russian and Iranian oil purchased by China and India.

Analysis and future prospects

The balance between oil prices, refining margins and security of supply is essential for Asian refiners. As market players await the outcome of the OPEC+ meeting on June 2, the decisions taken will have a major impact on market dynamics and the competitiveness of refiners in Asia.
Asian refiners will continue to monitor geopolitical developments and OPEC+ production policies to adjust their strategies and maintain stable operations.

Orlen announces the definitive halt of its Russian oil purchases for the Czech Republic, marking the end of deliveries by Rosneft following the contract expiry, amid evolving logistics and diversification of regional supply sources.
Equinor and Shell launch Adura, a new joint venture consolidating their main offshore assets in the United Kingdom, aiming to secure energy supply with an expected production of over 140,000 barrels of oil equivalent per day.
Equinor announces a new oil discovery estimated at between 9 and 15 mn barrels at the Johan Castberg field in the Barents Sea, strengthening the reserve potential in Norway's northern region.
Sierra Leone relaunches an ambitious offshore exploration campaign, using a 3D seismic survey to evaluate up to 60 potential oil blocks before opening a new licensing round as early as next October.
Faced with recurrent shortages, Zambia is reorganising its fuel supply chain, notably issuing licences for operating new tanker trucks and service stations to enhance national energy security and reduce external dependence.
The closure of the Grangemouth refinery has triggered a record increase in UK oil inventories, highlighting growing dependence on imports and an expanding deficit in domestic refining capacity.
Mexco Energy Corporation reports an annual net profit of $1.71mn, up 27%, driven by increased hydrocarbon production despite persistently weak natural gas prices in the Permian Basin.
S&P Global Ratings lowers Ecopetrol's global rating to BB following Colombia's sovereign downgrade, while Moody’s Investors Service confirms the group's Ba1 rating with a stable outlook.
Shell group publicly clarifies it is neither considering discussions nor approaches for a potential takeover of its British rival BP, putting an end to recent media speculation about a possible merger between the two oil giants.
The anticipated increase in the tax deduction rate may encourage independent refineries in Shandong to restart fuel oil imports, compensating for limited crude oil import quotas.
Petro-Victory Energy Corp. starts drilling of the AND-5 well in the Potiguar Basin, Brazil, as the first phase of an operation financed through its strategic partnership with Azevedo & Travassos Energia.
The Texan Port of Corpus Christi has completed major widening and deepening work designed to accommodate more supertankers, thus strengthening its strategic position in the US market for crude oil and liquefied natural gas exports.
BP Prudhoe Bay Royalty Trust is offering its interest in Prudhoe Bay, North America’s largest oil field, as part of its planned dissolution, assisted by RedOaks Energy Advisors for this strategic asset transaction.
Donald Trump announced that the United States will no longer oppose Chinese purchases of Iranian oil, immediately triggering a drop in global crude oil prices and profoundly reshaping international energy trade partnerships.
Research firm S&P Global Commodity Insights lifts its outlook for the fourth straight year, betting on three point five mn barrels per day from 2025 despite lower prices.
Enbridge plans to expand its infrastructure to increase oil transportation from the American Midwest to the Gulf Coast, anticipating rising exports and addressing current market logistical constraints.
US commercial crude inventories significantly decline by 3.1 million barrels, widely surpassing initial forecasts and immediately pushing international oil prices higher.
The UK could have hydrocarbon reserves twice as large as current official estimates, according to Offshore Energies UK, highlighting the impact of fiscal policies on forecasts and the economic future of the North Sea.
Following US strikes in Iran, international energy companies partially evacuate their teams from Iraq as a precaution, while Lukoil maintains its entire personnel on southern oilfields.
Chinese independent refineries remain cautious amid rising Iranian crude prices driven by escalating Iran-Israel tensions, potentially threatening access to the strategic Strait of Hormuz.