Refiners are enjoying the best of times as of mid-2022: Saudi Aramco’s 1Q22 upstream profit improved 75 per cent on higher crude prices and production but downstream, including refining, gained 130 per cent. In the downstream business, margins in the spread between the input cost of crude oil and the prices of outputs typically hover between $2 and $5 a barrel and frequently go negative.
As of mid-2022, refining margins have soared above $30 a barrel on a global basis and $50 in some locations as China cut its refineries’ export quotas by more than half while diesel stocks in Europe, US and Singapore have drained to multi-year lows. Even though crude prices are, historically speaking, not that high, the squeeze on refined products due to Opec+ production restrictions, sanctions on Russia, Iran and Venezuela, crimp the availability of diesel-rich, medium-gravity crude oils driving end-user prices to records ($176 a barrel for diesel in the UAE in mid-2022).
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