Crude Quality a Big Issue for Europe's Refiners

Copyright © 2022 Energy Intelligence Group All rights reserved. Unauthorized access or electronic forwarding, even for internal use, is prohibited.

Europe's peculiar refining system will make it especially difficult for it to wean itself off Russian oil. European refiners have relied on medium, sour Russian Urals crude for decades, a trade that has shaped the sector's feedstock and yield needs. Although there is ample crude to replace Russian barrels in global markets, it is mostly lighter, sweeter grades that yield lots of light products like gasoline and naphtha. Less available are the medium, sour grades similar to Urals that better yield the middle distillates — diesel, jet fuel and even low-sulfur fuel oil — that are most needed in Europe now. Refiners in Europe could earn nearly $25 per barrel by refining Brent-linked crude now, but they are barely running at rates sufficient to meet customer demand. The lack of appropriate feedstock helps explain this as the effect of formal sanctions and voluntary "self-sanctioning" increasingly removes Urals as a feedstock option. The situation will get more acute if the EU officially enacts its plan to ban imports of Russian crude and refined products by the end of the year. The plan would force the EU's 27 members to replace 2.4 million barrels per day of crude and 1.4 million b/d of products that they imported from Russia in 2021. Landlocked Hungary, Slovakia and the Czech Republic might get a grace period and assistance to arrange alternative supplies. Combined, they imported just 265,000 b/d of crude and products from Russia in 2021.

Refining, Crude Oil, Oil Products, Diesel/Gasoil, Sanctions
Europe's portfolio LNG players look best placed to capitalize on the continent's need to replace Russian gas.
Thu, May 19, 2022
Brent rose by 14¢ to settle at $113.56/bbl on Tuesday, while WTI fell 52¢ to settle at $109.77/bbl.
Tue, May 24, 2022
Saudi Arabia expects oil giant Aramco to continue to thrive as it banks on hydrocarbon demand remaining strong and production capacity tight.
Tue, May 24, 2022