OPEC+ falls apart - impact on refining

Since the breakup of the OPEC+ production cut agreement on 6 March, Saudi Arabia has announced price cuts and its intention to increase supplies to international and domestic customers in Q2 2020. From a refining perspective, this material increase in supply of medium/sour barrels will widen crude differentials, providing much needed margin support in Europe and Asia. But the support is likely to be short lived - the impact of lower oil prices is unlikely to spur product demand growth nor stimulate refining’s call on crude for long if product demand remains weak and cracks spreads remain at current levels.