29-04-2025

Crude prices are increasing: Why hydrocarbon loss control deserves attention

As crude oil prices continue to decline, a notable number of refineries, particularly those operating with thinner margins, are choosing to scale back or fully suspend operations. Interestingly, despite this trend, global crude demand remains stable. Refineries that continue operating are maintaining steady throughput levels, yet they are not immune to the margin pressures created by falling prices.

While both revenues and variable costs are decreasing in tandem, fixed operating costs remain constant, placing added strain on margins. This dynamic is prompting many operators to revisit areas of the business that were previously deprioritized, seeking untapped opportunities to improve profitability.

Cost Optimization Over Revenue Dependency
In the face of external market volatility, refineries have limited influence over revenue. This shifts the strategic focus toward cost reduction — particularly variable costs on a per-barrel basis.

Historically, the opportunity to reduce these costs was considered marginal. However, as input and product prices decline, the proportion of recoverable variable costs becomes more significant relative to total operating expenses. While the absolute dollar value of savings may be smaller, the percentage impact on margins has grown.

A Renewed Focus on Hydrocarbon Loss Control
One of the most impactful, and often overlooked, areas of improvement is hydrocarbon loss recovery. As crude prices fall, the economic impact of even minor losses becomes increasingly meaningful.

What once may have been dismissed as an incremental gain now presents a strategic opportunity to protect and enhance margin performance.

The Time to Act Is Now
For refineries navigating today’s market pressures, now is the time to strengthen hydrocarbon loss recovery initiatives. These efforts can deliver measurable operational improvements without the need for capital investment — a critical advantage in a cost-conscious environment.

Hydrocarbon loss control is no longer a marginal consideration. It is a strategic imperative.

Without capital investment, we create actionable ways to sustainably increase refinery margins by 2-3%. Contact us for a complimentary assessment, to help solve your complex business issues. We are here to Make It Happen™.