SINGAPORE, April 28 (Reuters) - Asian oil refiners are reaping their highest profits ever this week, spurred by higher fuel demand during peak holiday seasons as more economies recover from the COVID-19 pandemic while the region ramps up exports to Europe to replace a Russia shortfall.
Profit margins for complex refineries in Singapore, the bellwether for Asian refiners, tipped over $20 a barrel on Wednesday.
Gasoline, diesel and jet fuel crack spreads all hit fresh record highs of $22.28, $47.53 and $37.38 per barrel respectively on Thursday, thanks to a transport boom as more economies ease COVID restrictions.
The demand strength comes at a time when supplies remain tight following lower fuel exports from China and disruption to trade flows of Russian oil due to international sanctions, industry analysts said.
"The current strength in cracks for transportation fuels are likely due to the convergence of improving demand and tightened regional production," Sandy Kwa, senior analyst at Boston Consulting Group, said, adding there is also some seasonal support coming from the Ramadan month in Indonesia and Malaysia.
"Meanwhile, regional production is subdued due to the spring refinery maintenance season, as well as low runs in China... The current robust margins will incentivize the available refineries to maximize runs, and even encourage those on turnarounds to return online."
Strong margins will benefit export-oriented refiners such as South Korea's SK Energy and S-Oil Corp, as well as Taiwan's Formosa Petrochemical Corp.
However, refiners may have little room to squeeze out more fuel because most are already running at full capacity, traders said.
"Refiners are already maxing out. Everybody wants to run more but there is not really much spare capacity except for China," said an analyst at a North Asian refiner.
China's March crude throughput fell to its lowest level since October and is expected to fall further as a surge in crude oil prices squeezed margins and tight COVID lockdowns hurt fuel consumption.
Western sanctions on Russia have hit exports from the world's top crude and oil products exporter combined. That has crimped supplies of diesel and refining feedstocks such as vacuum gasoil just as peak consumption seasons like the Eid festival in May and U.S. summer driving season kick in.
"In addition to the potential reduction of Russian gasoil supply going forward, without sufficient gas supply in the EU to power industries and power stations, demand on diesel is expected to increase as well," a Singapore-based trader said.
On Wednesday Russia cut gas supplies to Poland and Bulgaria for refusing to pay in roubles, cranking up retaliation for Western sanctions imposed over Moscow's invasion of Ukraine. Russia calls its actions in Ukraine a "special operation".
Europe's diesel imports from Asia, the Middle East and the United States are set to hit their highest levels in almost three years this April.
U.S. refiners are also prioritising diesel output over gasoline because distillates stocks are at their lowest level since May 2008.
Reporting by Florence Tan, Koustav Samanta and Mohi Narayan; Editing by Jamie Freed and Jan Harvey