Refineries Saw 3.51 Million bpd of Unplanned Outages in April Due to Middle East Conflict

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Written by Amir Richani for IIR News Intelligence (Sugar Land, Texas)

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Summary

Despite a recent ceasefire and several negotiation rounds between the United States and Iran, the ongoing war in the Middle East continues to affect downstream refinery output worldwide and drive price escalation of refined product.

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Unplanned Outages Lead to 1 Million-bpd Jump in Lost Refinery Output

According to Industrial Info Resources data, unplanned outages across downstream refineries due to the Middle East conflict rose from an average of 2.51 million barrels per day (bpd) in March to 3.51 million bpd in April.

This increase was primarily the result of refineries in North Asia derating units due to crude oil shortages, with their unplanned capacity shutdown more than doubling from around 500,000 bpd in March to 1.2 million bpd in April.

In Southeast Asia, April's unplanned capacity loss was mainly due to the Pengerang Refinery shutdown in Malaysia caused by crude supply disruption.

Focusing on the Middle East, assets in the region recorded a peak capacity shutdown of 2.4 million bpd in early to mid-April, which then dropped to 1.8 million bpd towards the end of the month as refining rates recovered.

Lost output from mechanical disruptions peaked at 1.3 million bpd in April, averaging 1.2 million bpd for the month. Several of these disruptions occurred after drone attacks at key infrastructure in the Middle East.

Economic disruptions, mainly from crude supply issues, peaked at 2.9 million bpd and averaged 2.4 million for the month.

Oil Prices and Mixed Prospects for the End of the War

As of May 6, oil prices had fallen below the US$100 mark after the U.S. government announced a pause of its military operation in the Middle East.

"The Operation Epic Fury is concluded. We achieved the objectives of that operation," said U.S. Secretary of State Marco Rubio.

That statement offered hope of an end to hostilities. Meanwhile, news outlets reported that Iran indicated the Strait of Hormuz could reopen once the threats ended.

This would allow oil and gas flows from Gulf countries to resume and could reduce refining stoppages caused by the drop in crude supply.

However, this conflict has seen constantly changing prospects for an end to hostilities, so uncertainty remains.

Key Takeaways

• Refineries saw 3.51 million bpd of unplanned outages on average in April due to the Middle East conflict.
• Lost refinery output due to the conflict jumped by an average of 1 million bpd from March to April.
• This increase was primarily the result of refineries in North Asia derating units due to crude oil shortages.

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