Commercial performance of a refinery is the effectiveness of sourcing crude and selling refined products. Good performance entails getting the optimal crude at the lowest possible price and selling the optimal product slate at the highest possible price.
The prices for crude and products that a refiner faces are largely driven by market conditions (as reflected by the spot market indexes) that are out of the refiner’s control. However, the refiner typically does have some influence on the price paid/received relative to the market index through effective negotiation of individual trades and contracts.
Good commercial performance typically requires excellence in the following areas:
- Identifying available crudes and intermediates for purchase
- Estimating volumes of product that can be sold – Minimums and maximums, by type, quality and channel
- Forecasting crude and product prices
- Executing crude and product trades
- Arranging optimal crude delivery
- Executing product and intermediate sales – Spot and term, bulk and rack
FIND OUT MORE
The Refinery Reference Desk includes content derived from our industry experts as well as from public data sources such as company websites. Nothing herein is intended to serve as investment advice. This material is based on information that we believe to be reliable and adequately comprehensive, but we do not represent that such information is in all respects accurate or complete. McKinsey Energy Insights does not accept any liability for any losses resulting from use of the content.