Profitability of oil refining worsens Oil product prices have risen, but the profitability of refineries in Asia and Europe, on the contrary, has worsened. On Sept. 20, Rotterdam's refining margin, a European measure of profitability, was minus $10.95 a barrel, according to the London Stock Exchange. Singapore's refining margin, Asia's benchmark, also fell below minus $4 on September 10. Refining margin is the amount remaining after deducting the cost of purchasing crude oil and transportation costs from the revenues that the refineries receive from the sale of petroleum products. If we take into account only the "gap between the prices of oil and oil products", then the situation allows oil refining companies to count on profits. In fact, spreads between US and European diesel futures are near all-time highs. As tensions in the Middle East escalate, tanker freight rates have risen sharply since September and refiners have suffered losses, according to Nike. According to LSEG, current freight rates for very large tankers carrying crude oil from the Middle East to Asia and Europe, and from Africa to Europe, are $20-40 per barrel. This is more than 10 times the normal value. Refineries in Europe bought oil from the North Sea. According to Morgan Stanley, the cost of supplying oil from the North Sea (Brent grade) to northwestern Europe is $10-15 per barrel lower than the cost of transporting oil over long distances. But as demand grew, the spot price of Bort oil rose above $154 a barrel in early October, reaching a record high. At that time it was 50% higher than the price of the futures contracts. Refineries in Asia, which rely heavily on crude from the Middle East, are also struggling to avoid rising transportation costs.

Profitability of oil refining worsens Oil product prices have risen, but the profitability of refineries in Asia and Europe, on the contrary, has worsened. On Sept. 20, Rotterdam's refining margin, a European measure of profitability, was minus $10.95 a barrel, according to the London Stock Exchange. Singapore's refining margin, Asia's benchmark, also fell below minus $4 on September 10. Refining margin is the amount remaining after deducting the cost of purchasing crude oil and transportation costs from the revenues that the refineries receive from the sale of petroleum products. If we take into account only the "gap between the prices of oil and oil products", then the situation allows oil refining companies to count on profits. In fact, spreads between US and European diesel futures are near all-time highs. As tensions in the Middle East escalate, tanker freight rates have risen sharply since September and refiners have suffered losses, according to Nike. According to LSEG, current freight rates for very large tankers carrying crude oil from the Middle East to Asia and Europe, and from Africa to Europe, are $20-40 per barrel. This is more than 10 times the normal value. Refineries in Europe bought oil from the North Sea. According to Morgan Stanley, the cost of supplying oil from the North Sea (Brent grade) to northwestern Europe is $10-15 per barrel lower than the cost of transporting oil over long distances. But as demand grew, the spot price of Bort oil rose above $154 a barrel in early October, reaching a record high. At that time it was 50% higher than the price of the futures contracts. Refineries in Asia, which rely heavily on crude from the Middle East, are also struggling to avoid rising transportation costs.