What happened to the Lindsey Oil Refinery?

The Lindsey Oil Refinery, which was responsible for about 10% of the UK's fuel supply, has become insolvent and halted operations. This sudden shutdown has created a significant supply gap in the UK market, particularly for diesel and jet fuel, forcing the country to quickly increase imports to avoid shortages.

What are refining margins and why do they matter?

Refining margins represent the difference between what refineries pay for crude oil and what they earn from selling refined products like gasoline and diesel. When supply disruptions occur, as with the Lindsey refinery shutdown, refiners with operating capacity often see their margins increase due to higher product prices and demand. Higher margins typically lead to increased profitability for refining companies.

How do tanker shipping companies make money from this situation?

Tanker companies make money by charging rates (called charter rates) to transport fuels across water. When there's a sudden need to import more fuel, as in the UK's current situation, the demand for tankers increases. With limited tankers available, shipping companies can charge higher rates for their vessels, potentially leading to significantly higher profits during the supply disruption period.

What makes this an event-driven investment opportunity?

An event-driven investment opportunity arises from a specific, identifiable event that affects market conditions. The Lindsey refinery shutdown is precisely this type of catalyst – a sudden, unexpected disruption creating a clear market imbalance. The investment thesis is straightforward: companies positioned to help solve this supply problem (refiners and tankers) should benefit in the short to medium term while the market adjusts to the new reality.

15 handpicked stocks

UK Refinery Disruption

The shutdown of a major UK refinery has created an urgent need for fuel imports. Our analysts have carefully selected companies positioned to benefit from this supply gap, including European refiners and tanker operators ready to meet the increased demand.

Han Tan | Market Analyst

Updated 2 days ago | Published at juillet 3