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Refining margins are likely to remain elevated through FY27 as disruptions to global oil supply chains take time to normalise, Jefferies said, even as crude flows through key Middle East routes have recovered to around 80 per cent of pre-conflict levels.
The brokerage said Singapore gross refining margins averaged USD 15.2 per barrel in FY27 so far, while gasoline, diesel and aviation fuel cracks stood at USD 38, USD 61 and USD 68 per barrel, respectively. It attributed the strong margins partly to lower Russian refined product exports following attacks on the country's refining infrastructure, which have tightened the middle-distillates market. "Normalisation of supply chains is likely to take time, likely supporting elevated margins over FY27, Jefferies said, pointing to continued strength in the refining market despite some improvement in crude flows. Around 40 per cent of Middle East crude loading has shifted to Yanbu in the Red Sea and Fujairah in the Gulf of Oman, compared with 17 per cent in February, the report said. Overall crude and refined product flows have recently reached around 16 million barrels per day, against about 20 million barrels per day before the conflict, while refined product shipments remain affected. Transport costs are another factor keeping pressure on the oil market. Freight rates have declined 2 per cent week-on-week but remain around eight times higher than at the start of the conflict. Freight now accounts for more than 25 per cent of the landed cost of crude, compared with about 3 per cent before the conflict, the report said, adding that freight rates could remain elevated in the near term with multiple attacks on oil tankers. The report also flagged tighter gas markets ahead of winter. Spot LNG prices averaged USD 26 per million British thermal units, while European gas storage stood at 73 per cent, below 83 per cent a year earlier. Jefferies expects gas prices to remain elevated as winter approaches. At the same time, petrochemical margins have rebounded, rising 79 per cent from February-end, while oil marketing margins remain under pressure. Jefferies said the evolving supply disruptions, elevated freight costs and sanctions-related risks could continue to shape energy markets in the coming months. (ANI)
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