The US imposes tariffs on Canada, and Asian oil refiners' gross profits may see a short-term boost
author: Ann
2025-03-24
Against the backdrop of turbulent global energy markets, the rapid development of the industry, geopolitical games, and the swing of the balance of supply and demand have made the market face uncertainty at all times. In order to timely convey industry dynamics and help investors and companies interpret market changes, we continue to provide high-quality data, models and analysis to help decision makers see the overall situation and look to the future. .
Focusing on the impact of the US tariffs on Canadian imported energy, this move may drive up the gross profit of Asian refineries.
Since the Trump administration imposed a 10% tariff on Canadian energy on March 4, US integrated refineries have faced unprecedented challenges. Since US refineries mainly process heavy crude oil, and Canada has always been an important crude oil supplier, the imposition of tariffs has undoubtedly pushed up raw material costs. This tariff will increase the crude oil costs of US refineries by $6-8 per barrel. Under cost pressure, US refineries have to turn to other places to purchase heavy crude oil, which in turn prompts US consumers to rely more on Asia's refined oil supply in the short term.
For Asian refineries, this change undoubtedly brings opportunities. As U.S. refiners reduce crude oil imports from Canada, demand for refined products in Asia has surged, boosting the gross margins of Asian integrated refiners. Refiners in China and South Korea, in particular, are expected to benefit from a short-term improvement in refining margins. However, this upward momentum may be short-lived. In the long run, the tightening global supply of heavy crude oil will push up the processing costs of integrated refineries around the world, and Asian refineries will not be immune.
Data show that the WTI low-sulfur-high-sulfur crude oil spread has narrowed since November last year, indicating that heavy crude oil prices have risen and refining margins have narrowed. It is predicted that the heavy-light crude oil spread in Asia may follow the same trend in the second half of the year. In addition, the U.S. tariffs on Canadian oil may cause more refineries around the world to compete for heavy crude oil, eliminating the cost advantage of Asian integrated refineries.
On the other hand, China's fuel export data also revealed some information about structural demand weakness. In 2024, China's total exports of gasoline, diesel and aviation fuel reached 36.7 million tons, down 12.6% from the previous year. Although China announced that the first batch of refined oil export quotas in 2025 will be 19 million tons, which is basically the same as the same period last year, this situation may change in the short term if the United States increases its fuel imports from Asia.
In summary, the US move to impose tariffs on Canadian imported energy will have a profound impact on the global energy market. Although Asian refineries may benefit from the surge in demand for refined oil in the short term, they still face many challenges in the long run.
Focusing on the impact of the US tariffs on Canadian imported energy, this move may drive up the gross profit of Asian refineries.
Since the Trump administration imposed a 10% tariff on Canadian energy on March 4, US integrated refineries have faced unprecedented challenges. Since US refineries mainly process heavy crude oil, and Canada has always been an important crude oil supplier, the imposition of tariffs has undoubtedly pushed up raw material costs. This tariff will increase the crude oil costs of US refineries by $6-8 per barrel. Under cost pressure, US refineries have to turn to other places to purchase heavy crude oil, which in turn prompts US consumers to rely more on Asia's refined oil supply in the short term.
For Asian refineries, this change undoubtedly brings opportunities. As U.S. refiners reduce crude oil imports from Canada, demand for refined products in Asia has surged, boosting the gross margins of Asian integrated refiners. Refiners in China and South Korea, in particular, are expected to benefit from a short-term improvement in refining margins. However, this upward momentum may be short-lived. In the long run, the tightening global supply of heavy crude oil will push up the processing costs of integrated refineries around the world, and Asian refineries will not be immune.
Data show that the WTI low-sulfur-high-sulfur crude oil spread has narrowed since November last year, indicating that heavy crude oil prices have risen and refining margins have narrowed. It is predicted that the heavy-light crude oil spread in Asia may follow the same trend in the second half of the year. In addition, the U.S. tariffs on Canadian oil may cause more refineries around the world to compete for heavy crude oil, eliminating the cost advantage of Asian integrated refineries.
On the other hand, China's fuel export data also revealed some information about structural demand weakness. In 2024, China's total exports of gasoline, diesel and aviation fuel reached 36.7 million tons, down 12.6% from the previous year. Although China announced that the first batch of refined oil export quotas in 2025 will be 19 million tons, which is basically the same as the same period last year, this situation may change in the short term if the United States increases its fuel imports from Asia.
In summary, the US move to impose tariffs on Canadian imported energy will have a profound impact on the global energy market. Although Asian refineries may benefit from the surge in demand for refined oil in the short term, they still face many challenges in the long run.
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