Refineries that usually rejoice at falls in the price of crude as a way to boost profits are instead contemplating extensive maintenance and slowing output as demand is destroyed by travel restrictions in response to the coronavirus pandemic.
In Asia, margins for producing transport fuels plunged to multi-year or multi-month lows this week after more countries imposed international travel restrictions and curbed domestic movement as part of measures to slow the spread of the virus.
Airlines and airports are facing a huge shock as they battle a cash crunch while gasoline demand in the United States, the world's largest oil consumer, is plunging as state and local governments advise people to stay at home and businesses to shut. Asian refiners may have to cut jet fuel production.
In Europe refiners are losing nearly $7 on every barrel of gasoline they produce, a figure not seen for 11 years. Meanwhile, differentials for jet fuel cargoes fell to a record low because of the lack of demand.
Asian refiners are producing gasoline at a loss of 78 cents a barrel of Brent crude, their worst loss in 13 months.
US gasoline refining margins
Asian refining margins, or cracks, for jet fuel
"When crude prices fell heavily early last week, it gave an incentive to refineries to keep runs unchanged. Eventually, with the virus-related situation developing, it's now the second time for global refineries to think of run cuts," said one Seoul-based middle distillates trader.
Traders, all speaking on condition of anonymity, said it was extremely difficult for refiners to plan their run rates because the situation changes every day.
Refineries face a choice between extending maintenance while margins are so poor or ramping up to take advantage of cheap crude to fill storage with refined products.
However, once storage has been filled, refining rates would have to fall sharply.
"European refiners will have to reduce runs to the lowest technically possible, so 70-80%," one trader said, referring to the consequence of any increase in run rates to fill storage.
Energy major Total
A source at another European refiner, who asked not to be named, said it is considering cutting runs at its refineries in April.
Italian energy group Eni
"The extent to which (refinery) runs increase will quickly become constrained as product cracks reach a ceiling due to high inventory levels and weak global demand," said consultancy Woodmac.
A spokesman for Repsol said that the Spanish refiner had activated a global plan two weeks ago to ensure normal operation at all its facilities, while minimising the risks of contagion and the spread the disease.
"Currently, oil products demand is decreasing and our refineries will adapt to this market situation at all times," a spokeswoman for Spanish refiner Cepsa said.
Asked about the impact from the coronavirus pandemic, a spokesman for the German mineral oil industry association MWV said that refineries were producing normally.