US refiners expect Russian fuel sanctions to keep margins high |
January 31 (Reuters) – Europe Union will start next week Russia fuel import ban this year USA it is expected to keep the profit margin at a high level in oil refineries.
On February 5 Russia a ban on fuel imports could keep margins high this year and strain supplies of Russia’s key intermediates, distillate fuel and vacuum gas oil (VGO).
Exxon Mobil ( XOM.N ), Marathon Petroleum ( MPC.N ) and Phillips 66 ( MPC.N ) posted strong refining results for 2022 on Tuesday, citing strong demand and higher operating rates for diesel and jet fuel.
Exxon Chief Executive Darren Woods said tight fuel supply margins would be high this year, and the tailwind could continue into 2024.
Last year, Marathon’s processing margin increased 81.5% year-over-year to 28.82 dollars/barrel, while rival Phillips 66’s oil increased by 65% to 19.73 dollars/barrel reached. Valero’s revenues more than doubled from the previous year to 6.3 billion reached the dollar.
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“Most of the people who are in the trade today are actually sanctions.” Russia think it will result in lower refinery utilization, and you’ll see less exports of VGO and diesel from Russia when the sanctions come in,” said Gary Simmons, chief commercial officer at Valero, last week.
Rick Hessling, Marathon’s senior vice president, said Tuesday that lower diesel inventories with VGO and the potential impact of the EU ban on Russian exports will further tighten refining margins.
Global head of clean products vice president Marathon exports up to 350,000 barrels per day to Latin America, but is seeing “increasing withdrawals to Europe,” according to Brian Party. He added that the full impact of the EU ban would likely not be felt before the second quarter.
Richard Harbison, senior vice president of oil refining at Phillips 66, said that if Russia cuts fuel exports, USA can set the “minimum price” in markets where oil refining enterprises also compete.
Prior to the ban, Russian exports to Northwest Europe accelerated, which could affect US exports.
“We’re entering the sanctioning period with really historically high levels of inventory,” said Marathon Partee.
Still, there are product specifications that could make it difficult to position Russian fuel in markets that are not accustomed to the fuel, he said.
“(The) supply assurance component is a really big unknown,” he said.
Reporting by Laura Sanicola Editing by Deepa Babington
Our standards: Thomson Reuters Trust Principles.
Laura Sanicola
2023-02-01 12:10:38
Source – reuters
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