UNITED STATES (OBSERVATORY NEWS) — International banks suspend servicing of credit lines of a number of independent oil refineries, as they are worried about the growing risk of defaults in all industries due to the coronavirus epidemic.
According to sources, banks suspended servicing credit lines of at least three private oil refineries worth $ 600 million, including French company Natixis, Dutch ING and Singaporean DBS Group Holdings.
“All of our applications for new loans are frozen … these loans are of key importance, as we buy from 6 million to 8 million barrels of oil every month,” one source told Reuters.
State and private refineries have already reduced their performance amid falling demand for fuel due to an outbreak of coronavirus. Now they have stepped up these cuts, according to Bloomberg.
The average figure as of last Thursday was about 10 million barrels per day, 25% less than at the same time last year, when average production was at a record high, close to 13 million barrels per day.
Analysts expect low interest rates to continue until the end of this month. But if this situation continues in March, some processors will run out of storage space.
This month they took advantage of low prices to stock up on oil.
In addition, oil refineries, which account for most of China’s growing thirst for oil, which helped restore oil prices after the crisis, have funding problems.
“Our banks told us that as long as the loans are for oil going to Shandong, it will be difficult to get approval,” another source told Reuters.
According to Reuters, three oil refineries refused to extend the credit line, combining quotas for oil imports of about 240 thousand barrels per day. If more and more banks fear defaults among processors, this will affect imports in the long run.
This article is written and prepared by our foreign editors writing for OBSERVATORY NEWS from different countries around the world – material edited and published by OBSERVATORY staff in our newsroom.
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