European refiners are not shortening or delaying spring maintenance despite the surge in refined product cracks following the US–Iran war, according to market participants. Many service providers have already been paid, and cancelling or rescheduling work would carry costs that could outweigh any gains from stronger margins.
Refined product flows through the strait of Hormuz have been disrupted since the war began on 28 February, pushing middle distillate premiums to crude sharply higher. European jet cracks to Ice Brent hit a record $109.19/bl today, 12 March, while diesel cracks reached $63.92/bl on 6 March — the highest in 40 months.
Refineries carrying out seasonal maintenance are not looking to defer turnarounds to chase these margins, sources said. The subject "would be in people's minds", one distillates trader said, but added they would be surprised if refiners made changes at this stage. Prolonged disruption around the strait of Hormuz could shift the calculus, the trader said.
Refiners did cut maintenance short when Russia invaded Ukraine. Through 2023 and early 2024, European plants benefited from firming margins as the market adjusted to the loss of sanctioned Russian oil, with some operators running units "like mad", feedstock traders said. The EU and UK banned Russian refined products in February 2023.
For now, however, the economics favour sticking with planned work. Although ending turnarounds early "would make a lot of sense economically", one source said, "changing the schedule of teams that have been hired and delaying regulatory inspections may not be easy, especially on a prompt basis". Such changes "would require agile teams and flexible contracts", which are not standard across the sector.
Consultants specialising in turnaround engineering also stressed that cancelling or postponing maintenance programmes can be costly. Engineering services are priced at a premium and bound by fixed-schedule contracts.
The duration of the US–Iran war is another factor. US president Donald Trump said on 9 March that the conflict was both "practically over" and also just "beginning". The remarks suggested the potential for near-term relief to supply disruptions. A resumption of pre-war middle distillate loadings from the Mideast Gulf would quickly ease concerns over Europe's jet fuel and diesel supply. The EU, UK and Norway sourced 44pc of their 670,000 b/d jet imports and 8pc of their 1.125mn b/d 10ppm diesel imports from the region last year, according to Kpler.
There is no sign of refiners hiking run rates to cash in on the rise in crack spreads. European crude receipts averaged 9.97mn b/d during 1–12 March, down from 10.27mn b/d in February, Kpler data show. The IEA said today it expects European refinery throughput to fall to 11mn b/d this month from 11.3mn b/d in February because of seasonal maintenance.
