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Russia's invasion of Ukraine in February last year pushed diesel and petrol cracks to record in the following quarter, giving oil refiners globally unprecedented profits but they have crashed this year, denting refiners' profits.
A crash in global cracks in April-June this year will shrink profits of refiners when compared with the outlier period of last year, an analysis of data and industry experts said.
Rising demand, low inventories and oil market disruption centered around Russia's invasion of Ukraine pushed cracks -- the differential between a barrel of crude oil (raw material) and the petroleum products refined from it -- upwards starting March last year.
Diesel cracks shot to over USD 30 per barrel and petrol inched closer to USD 20 and the upward trajectory continued in April-June quarter. Diesel cracks in June last year soared to USD 74.95 a barrel while petrol cracks neared USD 42. Jet fuel cracks soared to USD 62.
An analysis of data for past five years showed petrol cracks barely touching double digits, while diesel cracks never crossed USD 20.
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That rise gave refiners bumper profits but now when the margins have stabilised to near normal levels, the earnings would look dwarfed, experts said.
Diesel cracks in June this year hovered between USD 16 and 19 while petrol cracks were in the range of USD 10 and 14.
This unusual situation will result in refiners reporting lesser earnings in the April-June quarter, they said.
Reliance Industries Ltd, the operator of the world's largest single location refining complex, is due to announce its first quarter earnings on Friday. Indian Oil Corporation (IOC), the nation's largest oil firm, would announce Q1 results on July 28 and Bharat Petroleum Corporation Ltd (BPCL) would do so on July 26.
Global petrol prices crashed in June, denting refiners' profits, pushing up inventories in key trading hubs around the world.
Margins on petrol in Asia have plunged more than 102 per cent in July to a discount of 14 cents a barrel to Brent crude -- the lowest for this time of the year since at least 2000, the data showed.
