When energy trader Vitol launched a bid to buy one of Europe’s largest oil refineries last month, it demonstrated how Russia’s invasion of Ukraine has boosted competition for increasingly scare refining capacity. The agreed deal to purchase a controlling stake in Saras, which has a refinery in Sardinia, from the family of Italian billionaire Massimo Moratti came less than a year after Vitol had lost out to rival Trafigura in a battle for control of another giant refinery in Sicily.
Europe’s refineries have been in long-term decline, as major oil companies shut plants to try to meet net zero emissions targets and face the threat of electric vehicles. But, with war in Ukraine and tensions in the Red Sea, energy analysts now believe they may have a profitable future after all, thanks to elevated margins for refined oil products such as diesel and gasoline. Those margins could be driven even higher if Europe suffers further supply shocks