Jan 21 (Reuters) - Irving Oil is reducing its contract and plant workforce at Canada's largest oil refinery due to challenges caused by the coronavirus pandemic, the company said on Thursday.

The Canadian oil giant is cutting its contract workforce at its 320,000 barrel per day refinery in St. John, New Brunswick to 225 from 1,000 in the first quarter of 2021.

An additional 60 Saint John refinery employees were cut on Thursday, representing 7% of the refinery workforce, the company said.

"The COVID-19 pandemic has had extreme and serious impacts on our business and our industry," Irving Oil President Ian Whitcomb and chief brand officer Sarah Irving said in a joint statement, citing the collapse in demand for refined products, market volatility, poor margins and the economic downturn.

Last year, Irving said it would lay off 250 people, or 6% of its global workforce, due to demand disruption caused by the coronavirus pandemic.

A resurgence of coronavirus cases across the world has complicated an uneven recovery in consumption for liquid fuels that is estimated to have fallen by 9 million barrels per day in 2020, according to the U.S. Energy Information Administration.

U.S. refining margins were below $10 - the threshold above which most refiners make money - for the majority of the fourth quarter of 2020. Margins have since risen to about $12.70 on Thursday, though refinery utilization is off about 10% year on year.

Refiners across the globe have been scaling back contract workers as they defer maintenance projects as a result of the coronavirus pandemic.

Companies, many of them lumbered with high debts, slashed all but the most essential work.

U.S. oil refiners such as CVR, Hollyfrontier and PBF Energy also cut salaried employees last year due to economic strain caused by the coronavirus pandemic. (Reporting by K. Sathya Narayanan and Brijesh Patel in Bengaluru, Laura Sanicola in New York; Editing by Chris Reese, Hugh Lawson and David Gregorio)