How an explosion in a Korean refinery will affect the price of fuel in Europe
At least eight people were injured in an explosion and fire Thursday at a large 580,000 bpd refinery in South Korea, local news agency Yonhap reports. It is one of the main oil processing plants in the country. Firefighters received reports of an explosion at the refinery of the Onsan Industrial Complex in Ulsan owned by S-Oil shortly before 9pm. Thursday local time. The explosion occurred during the transformation of crude oil into oil. Firefighters at the scene appeared to have trouble controlling the fire, according to local reports cited by The Korea Herald .
The fire and the possible closure of a large refinery occur at a time when the production capacity margins of refineries globally are reduced to a minimum, and therefore this incident is accentuating an already present crisis in distilled petroleum products.
Global refinery capacity is now lower than before the pandemic after some refineries shut down after COVID crippled fuel demand in early 2020.
The Onsan refinery has three crude oil distillation units with a combined capacity of 580,000 barrels per day (bpd), according to Argus, which reports that market participants say a complete closure of the refinery is likely.
Globally, around 3 million barrels per day of refining capacity has been closed since the beginning of 2020, according to Wood Mackenzie estimates.
"For companies with outdated refineries that required significant investments to remain profitable, it was difficult to justify spending in the face of a weak demand outlook, particularly for gasoline due to increased fuel efficiency and increased of electric vehicles, ”Ed Crooks, vice president, Americas, of WoodMac wrote last week. Of course now the situation has completely changed and money can be found in abundance. However, the new production capacity that should result from the new plants in the Middle East and Asia has been delayed by logistical and industrial problems. In this situation, a cut in production capacity in Korea can also raise the price of petrol and diesel in Europe, if we do not have spare production capacity, and we do not have any.
Thanks to our Telegram channel you can stay updated on the publication of new articles of Economic Scenarios.
The article How an explosion in a Korean refinery will affect the price of fuel in Europe comes from ScenariEconomici.it .
This is a machine translation of a post published on Scenari Economici at the URL https://scenarieconomici.it/come-unesplosione-in-una-raffineria-coreana-influenzera-il-prezzo-del-carburante-in-europa/ on Fri, 20 May 2022 08:00:37 +0000.