· Refining margins have slipped during last fifteen days of Nov’21 on the back of a new COVID-19 variant being detected in South Africa (Diesel/Gasoline cracks declined by 34/48% to USD5.9/6.2/bbl for last fifteen days of Nov’21 against USD9.0/12.0/bbl for initial fifteen days).

· HSFO cracks, after improving during Sep’21-Oct’21 have slipped again after oil prices declined in recent weeks and averaged at negative USD16.5/bbl for last fifteen days of Nov’21. To note, HSFO cracks are at a low of almost two years.

· With the advent of a new COVID-19 variant, refinery margins can be in for a volatile ride once again and initial signs in this regard are already visible where oil prices tumbled on the news of a new variant being detected however later, when it emerged that booster shots of vaccine can work against the variant, price recovered along with refinery margins internationally.

· For local refiners, oil prices slipping and decrease in refinery margins can prove to be a double whammy however a bigger injury can occur from worsening HSFO cracks with 25-30% of the product slate belonging to the product.

Courtesy- AKD Research