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Downstream oil in brief: will lower oil prices benefit fuel retailers?

20 March 2020

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20 March 2020

Downstream oil in brief: will lower oil prices benefit fuel retailers?

Report summary

This is the second oil price crash that the industry has faced in the past decade, but this time is very different. Back in 2014, integrated oil companies were able to benefit from a sharp rise in refining margins and a rising oil demand outlook. This time around, oil demand is significantly weaker as the coronavirus pandemic depresses global economic growth. Fuels marketing will provide some stability, but we are unlikely to see the returns from the previous price crash.

What typically happens when oil prices crash, and how is this time different?
What impact will coronavirus have on European road fuel demand?
What are retailers doing to mitigate the risk posed by weakening demand?
Summary
Brent FCC margins to remain weak as coronavirus impacts mobility and industrial activity despite the oil price collapse
European fuel margins supported by lower oil prices, but non-fuel margins pressured as travel restrictions limit discretional driving