Karachi, September 29, 2021 (PPI-OT): Pakistan Oil and Gas: Crack spreads reacting to energy crunch

Refining margins continue to tread on the same path with spreads for HSD/MOGAS remaining at USD2.4/3.6/bbl for first fifteen days of Sep’21 where HSD spreads rebound sharply from USD0.54/bbl for last fifteen days of Aug’21.

Even though export of MOGAS from China and India has declined, the cracks continue to trade in the range of USD4-6/bbl as demand of the product is facing a slower recovery compared to HSD which is mainly used in industries and industrial transport.

HSFO cracks though remain negative, a significant recovery has been witnessed as recent news reports indicate increased demand from shipping sector while increasing gas prices have also forced countries to shift their power production to HSFO.

For local refiners, improvement in HSFO cracks is a significant positive with 25-30% of the product slate belonging to HSFO however the cracks still remain significantly lower than pre-pandemic levels hence the pressure on profitably is expected to continue.