Soaring global fuel costs are disrupting demand refining margins are unlikely to continue to rise

Recently, the world's largest independent oil trader, Vitol Group, expressed the view that soaring global fuel costs are beginning to weigh on demand
.

Mike Muller, head of Vitol Group Asia, said on a podcast produced by Gulf Intelligence last Sunday that consumers are being hit
by rising prices for gasoline, diesel and other petroleum products.
"There's very clear evidence that rising prices are causing economic pressure, which some people call demand disruption," Muller said, "and, not just oil, but also liquefied natural gas
.
" ”

It is reported that the price of refined oil products in the United States has reached a record high this year, and the prices of refined oil products in most other countries have also risen sharply, which has led to increased
inflation.
The price of refined oil products has risen even more than crude oil, which has risen by nearly 45% to $
110 per barrel.
This is largely due to the disruption of Russian oil supplies caused by the Russian-Ukrainian conflict and Western sanctions, which have exacerbated the global shortage
of spare capacity caused by years of underinvestment by refineries.

The so-called spread between refineries to convert WTI crude into gasoline and diesel now stands at $50 a barrel, more than
three times the average spread this century.
Last Friday, ExxonMobil (XOM.
US) also said it expects second-quarter refining business profit to increase by $5.
5 billion sequentially and that the company's operating profit could double from the previous quarter to a record high
.

Muller said: "Refining margins are at levels that no one could have predicted
.
But the consensus seems to be that refining margins cannot continue to rise
.
”

However, Muller also pointed out that if China's demand continues to recover as restrictions on the epidemic continue to ease, fuel prices may still remain at today's levels
.
Vitol CEO Russell Hardy also said last month that China's oil consumption is expected to increase by 1 million bpd
by the end of 2022.