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Sopuruchi Onwuka
A compilation of market factors including poor economic outlook arising from the global trade tensions stoked by reciprocal tariffs by the United States as well as the decision by key members of the Organization of Petroleum Exporting Countries (OPEC) to boost output by over 411,000 barrels per day mean that there is cheap crude amidst high demand for refined products.
Consequently, few efficient refiners across the globe are enjoying good business as margins hit new heights amidst low competition.
According to market reports seen by The Oracle Today, prices of gasoline also called petrol, jet fuel, and diesel have all stayed in double digits since the beginning of May. Global refining margins last month reached $8.37 per barrel, the highest since March 2024.
Tight supplies from refineries followed plant closures early in the year when Shell shut down its Wesseling and BP’s Gelsenkirchen refineries in Germany, as well as Petroineos’ Grangemouth plant in the UK.
Market pundits calculate that inefficiencies in new refineries in Africa and South America left the new plants unable to deliver expected impacts in the market under tight supplies.
They point out that whilst Europe and the United States shutter downstream capacity, upcoming giants such as Nigeria’s 650,000 b/d Dangote refinery or Mexico’s 340,000 b/d Dos Bocas continue to be plagued with operational disruptions.
The situation in the global fuel trade could have also been different if trade sanctions were lifted on Russia and Iran following negotiations which fell apart at concluding moments.
The failure of Russia-Ukraine and US-Iran talks did not come as a surprise to oil markets, but both outcomes have confirmed that the geopolitical risk premium will be around for some time.
OPEC+ production decisions will continue to be a driving force for prices, analysts noted, noting that the eight influential producers in the group are decided to boost output by Sticks to 411,000 barrels per day.
Eight OPEC+ countries that have started unwinding their 2022 voluntary production cuts agreed to another 411,000 b/d increase for July, the third straight month of expedited output hikes, bringing back 62% of their erstwhile curbs.
