As more countries lock down and restrict travel to contain the spread of the coronavirus, oil refiners from Texas to Thailand are bracing for deeper output cuts. As a result of the coronavirus pandemic, global fuel demand in Q2 is set to plunge by as much as 15 percent to 20 percent.
Along with Russia and Saudi Arabia’s decisions to increase crude supply, the sudden stoppage in activity is expected to overwhelm refiners. In Asia, India’s top refiner has trimmed output by up to 25 percent to 30 percent. Even as operators in Thailand, South Korea, and Japan shut plants for maintenance, they are looking at more cuts.
Several US refineries, including plants in the Los Angeles area, have also cut production. With overall products supplied in the most recent week declining by 2.1 million bpd, US fuel demand is sinking. In the coming weeks, gasoline demand in the nation could drop by nearly half.
In Europe, some refineries have scaled back production in Britain and Germany. With many of Phillips 66 refineries operating near minimum rates, its refinery utilization rate in Q1 is in the low-to-mid-80s range.
