IEA ASSESSES DECLINE IN EUROPEAN COMPANIES' OIL REFINING MARGINS

Refining margins for European integrated companies fell by an average of 65% year-on-year in the third quarter of 2024, while refining margins for U.S. independents fell by 56%, the International Energy Agency (IEA) said in a monthly report.

“Company-level reporting margins (which include aggregated coking, cracking and hydrocracking refining) of European integrated oil companies… BP, Shell, TotalEnergies, Eni and Repsol fell by an average of 37% in the third quarter of 2024 compared to the second quarter and were 65% lower than a year ago,” the report said.

“By comparison, independent U.S. refiners such as Marathon, PBF, Phillips 66 and Valero reported declines of an average of 17% quarter-over-quarter and 56% year-over-year,” the report added.

As the IEA notes, refining margins in the oil industry have declined significantly over the past year due to slower growth in demand for petroleum products, changes in legislation towards green energy, as well as the commissioning of new refineries and capacity expansion in the Middle East. East, Asia and Africa. Regionally, European refiners have been particularly affected, partly due to their significant share of the middle distillate market and higher cost structure, the agency explains.

The IEA believes that declining oil refining margins are encouraging European companies to develop the production of environmentally friendly fuels, particularly biofuels.