Oil Refining’s Four Big Challenges

Oil Refining’s Four Big Challenges

The oil market is on the mend. Demand will be back at pre-crisis highs by Q4 2022, while a resurgent Brent price and record upstream profitability are good indicators of the success OPEC+ has had with its strategy to rebalance the market.

Refining is a different story. Alan Gelder, Vice President Refining Analysis, identifies four challenges the sector faces, immediate and longer term.

First, refining margins are above the depths of a year ago but still very low. The recovery has been uneven for refining – gasoline demand has bounced with China and the US leading the way, whereas jet fuel demand globally is still well below pre-crisis levels. Refiners have been forced to blend jet fuel with diesel, increasing its supply, which has pushed the margin down.