Refining crunch keeps fuel prices high as crude retreats

{"text":[[{"start":9.42,"text":"Diesel and petrol prices are trading close to record premiums over crude oil, fuelling concerns that consumers and industrial users may see little immediate relief from a reopening of the Strait of Hormuz."}],[{"start":21.32,"text":"The gap between refined products and crude has ballooned in recent weeks and has narrowed only slightly as a deal between Iran and Oman promises to restore the flow of oil through the crucial energy market chokepoint."}],[{"start":34.56,"text":"Diesel currently trades at a premium of around $70 a barrel to crude, close to last week’s record high of $90 and many times larger than typical levels of about $20 a barrel, according to price tracker Argus."}],[{"start":48.2,"text":"Analysts say the disconnect reflects a global shortage of refining capacity that threatens to prolong the economic fallout from the war in the Middle East. While it represents a bonanza for big US refiners, it is a political problem for President Donald Trump, who is under pressure from elevated prices at the pump ahead of November’s midterm elections."}],[{"start":67.12,"text":"“It’s a maelstrom of disruption to shipping and a lack of processing capacity,” said Isabelle Gilks, a retail fuels analyst at Wood Mackenzie. “We’re seeing some softening in the crude market, but strong diesel and gasoline prices.”"}],[{"start":null,"text":"

"}],[{"start":81.76,"text":"Some of the world’s biggest refineries are in the Gulf and have been cut off by Tehran’s intermittent blockade of shipping through the Strait of Hormuz. The Gulf ordinarily supplies more than a fifth of the world’s crude oil, including feedstock to refineries outside the region."}],[{"start":97.04,"text":"Ukraine’s intensifying drone strikes on Russian refineries have taken more of the world’s refining capacity offline, while China has restricted exports of oil products."}],[{"start":106.4,"text":"Faced with limited crude supplies, refinery operators have tweaked their processes to maximise output of whichever product is commanding the biggest margins."}],[{"start":114.92,"text":"At the start of the conflict, this was jet fuel, where margins are still more than double those of prewar norms. Concerns have since shifted to supplies of other transport fuels such as diesel."}],[{"start":125.8,"text":"However, prioritising different fuels is seen only as a short-term fix while the conflicts in the Middle East and Russia restrict supplies."}],[{"start":133.08,"text":"“We’ve had rotating crises across different parts of the products complex and refiners can only solve one problem at a time,” said Daniel Evans, head of fuels and refining at S&P Global. “While it looks like we managed to get through the summer unscathed in terms of real acute supply disruptions, I wouldn’t say we’re out of the woods.”"}],[{"start":null,"text":""}],[{"start":153.68,"text":"Global inventories are fast eroding and Europe is particularly vulnerable after years of under-investment in refining, relying on imports for most of its needs."}],[{"start":162.58,"text":"With global markets becoming more reliant on the US for refined oil products, refinery operators on the Gulf of Mexico have been the biggest winners of the yawning gap between crude and product prices."}],[{"start":174.4,"text":"Marathon Petroleum, Phillips 66 and Valero Energy all beat analysts’ expectations for second-quarter earnings. Exxon and Chevron reported blockbuster profits of a combined $26.5bn in the three months to the end of June, driven by big increases in the contribution from their refinery businesses."}],[{"start":193.68,"text":"Exxon, which has the largest global refinery network outside China, said it produced record volumes of diesel during the second quarter to help meet the surge in global demand."}],[{"start":null,"text":""}],[{"start":204.54,"text":"The boom in refinery margins prompted an angry response from Trump, who said this week that Chevron and Exxon had made “too much money” and should “give some of that back to the public”."}],[{"start":216.12,"text":"Rising petrol and diesel prices are piling political pressure on the president ahead of November’s midterm elections as voters grow increasingly frustrated with high energy costs."}],[{"start":225.8,"text":"Trump’s intervention follows his earlier decision to order a Department of Justice probe into energy companies over price gouging, a tactic that was also employed by then-president Joe Biden when prices surged after Russia’s full-scale invasion of Ukraine."}],[{"start":240.28,"text":"“Gasoline Retailers must get their Prices down, IMMEDIATELY,” Trump wrote on his Truth Social platform in late June. “If Retailers don’t do this, big problems lie ahead!”"}],[{"start":null,"text":""}],[{"start":251.56,"text":"Surging exports of refined products such as petrol and diesel to customers previously reliant on the Middle East have helped to push up US domestic gasoline prices above $4 a gallon, a rise of about 35 per cent since the war began on February 28."}],[{"start":266.8,"text":"The average US pump price of diesel is currently $5.34 a gallon, up from $3.74 a year ago, according to the AAA motoring group. The average price during Trump’s second term has now overtaken the average during Biden’s presidency, according to FT calculations based on data from the US Energy Information Administration."}],[{"start":293,"text":""}]],"url":"https://audio.ftcn.net.cn/album/a_1786082446_4741.mp3"}