Oil Price headline: Refinery Shuts Down Due To Lack Of Crude
By Tsvetana Paraskova - Jul 18, 2022, 9:30 AM CDT
“In the circumstances, Sasol Oil will not be in a position to fully meet its commitments on the supply of all petroleum products from July 2022,” said the company, adding that it hopes the issue would be resolved soon and the refinery could resume production at full capacity by the end of this month.
The stoppage at Sasol’s Natref refinery now means that South Africa’s entire oil refining capacity is currently out of service, according to Bloomberg’s estimates. Other refineries have closed down production since COVID erupted, either because they would be converted to terminals or because of operational issues. Only Sasol’s synthetic fuel output using coal as a feedstock, of which South Africa has huge amounts, remains fully operational.
Despite the recent massive selloff in the oil futures market because of growing fears of recession, the global physical market for crude remains tight as the Russian invasion of Ukraine and the Western bans on Russian oil have upended trade flows. Refining capacity globally is also constrained as many developed economies, including the United States, have seen refining capacity shrink since early 2020. The U.S., in particular, has lost more than 1 million barrels per day (bpd) of refining capacity over the past two years.