Throughput Will Rise Sharply In the Coming Months
ESAI Energy estimates that global crude throughput fell below 78 million b/d in May, compared to 81.2 million b/d in January. Although throughput cuts in Russia have played a large role in the decline, heavy maintenance activities, a lockdown in China, and various outages along with typical seasonal demand swings have also contributed to lower throughput levels through May.
Exacerbating the impact of the temporary loss of capacity above, is less spare distillation capacity. Rationalization and project delays have reduced global distillation capacity by roughly 1.5 million b/d since the beginning of 2020.
As a result, the initial throughput response to the sharp reduction in Russian refined product supply has been slower than expected. That response is expected to accelerate in June as refiners in the U.S., Europe and the Middle East return from maintenance and China begins to export more refined product. High refining margins will encourage any export refiners that can increase throughput to increase utilization rates. (See ESAI Energy’s Refining Outlook for more detail on abnormally high refining margins). As a result, ESAI Energy is projecting a sharp recovery in crude throughput by June, and even more so by July.