IEA cuts global refinery runs forecasts on poor margins

The International Energy Agency has revised further down its estimates for global refining runs on the back of poor margins.

It now expects refinery throughput of 82.8 million b/d in 2024, down 180,000 b/d from its previous estimate and then 83.4 million b/d in 2025, down 210,000 b/d.

"Refining margins slumped further in September as gasoline, jet and diesel cracks deteriorated while crude prices improved on a relatively tighter market," the IEA said Oct. 15 in its monthly report.

So far this year, the IEA has cut its forecast of global runs in 2024 by 500,000 b/d, mostly driven by reduction in Chinese throughput and despite rises in the OECD on the back of higher runs in the US.

However, in 2025 the IEA expects a rise in Chinese throughput as the new Yulong refinery starts up.

The 400,000 b/d greenfield refinery started trial runs at the end of August and was expected to run at about 65% of capacity during the trial phase, according to S&P Global Commodity Insights data.

Despite the downward revisions, both 2024 and 2025 will see year-on-year increases in refinery runs, by 540,000 b/d and 610,000 b/d respectively, the IEA said.

The IEA reiterated its estimate of 240,000 b/d run cuts in Europe in Q4 but noted that more run cuts are possible if margins deteriorate further.

Declining profits have put growing pressure on refiners with Commodity Insights analysts reducing their Q4 2024 refinery run forecasts by 50,000 b/d due to reports of economic run cuts in Europe and elsewhere.

Italy's 300,000 b/d Sarroch refinery in Sardinia and Mediterranean refiners Eni and Repsol were among those said to be trimming runs rates by up to 10% in September, as stalling margins made heavy production volumes less attractive.

However crude runs in the OECD were expected to rebound in December following the end of seasonal maintenance, the IEA said.

A host of refineries in Europe, including Germany, Lithuania, the Netherlands and UK were undergoing scheduled turnarounds due to be completed in November, according to Commodity Insights data.