Galp's Q3 refining margins hit record high on Middle East fuel supply squeeze

By Reuters News

LISBON, Oct 12 (Reuters) - Portugal's oil and gas company Galp Energia GALP.LS said its refining margins more than tripled in the third quarter from a year earlier to record highs, as the Middle East conflict tightened supplies of refined products, driving prices sharply higher.

  • In its trading update, Galp said refining margins jumped to $33.8 per barrel in the third quarter from $9.5 a year earlier, doubling from $16.8 in the preceding three months.

  • Galp owns Portugal's sole 226,000-barrel-per-day oil refinery in Sines, which supplies between 85% and 90% of the country's fuel needs.

  • Benchmark Brent crude prices surged after the US and Israel attacked Iran in late February, prompting Tehran to effectively shut the Strait of Hormuz.

  • The resulting disruption to fuel supplies drove diesel, gasoline and other refined-product prices higher than crude, boosting refining margins worldwide and setting the stage for a multibillion-dollar windfall for oil companies.

  • However, record tanker freight rates in recent weeks are expected to weigh on margins after attacks around the Strait of Hormuz drove up shipping costs across global energy routes.

  • Galp also said its share of oil and gas production from its prolific offshore fields in Brazil - from where the bulk of its crude comes - rose 14% year-on-year to 131,000 barrels of oil equivalent per day. Average Brent crude prices increased to $97.0 per barrel from $69.1 a year earlier.

  • Galp is due to report its third-quarter results on October 26 ahead of trading on Euronext Lisbon.

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