KSA Business: Stretched oil refining sector fuels market volatility: report – Gulf Digital News

KSA Business: Stretched oil refining sector fuels market volatility: report – Gulf Digital News

Global oil refining capacity dropped for the first time in 20 years in 2020 and again last year, exacerbating tight markets and volatile prices for fuels such as gasoline and diesel, according to a new report.

The Oil Refining Industry Insights report by the International Energy Forum and S&P Global finds that global fuel markets are expected to stay tight for years as new capacity takes time to ramp-up and investments are muted by demand outlooks that show global petroleum demand plateauing.

"I am concerned that investors are holding back from new refinery investments based on decarbonisation forecasts that may not be borne out in reality," said IEF Secretary General Joseph McMonigle.

Balance fragile

In both the short-term and medium-term, the balance for global fuel markets will be fragile, underscoring the need to maintain robust inventories and contingency plans to deal with supply disruptions, the report finds.

"The global refining industry is stretched, so unexpected disruptions have a disproportionate effect on prices. Governments urgently need to review their contingency plans to ensure they can cope with the inevitable and I believe more investment will be needed," McMonigle said.

A record 3.8 million barrels per day (mbpd) of crude distillation capacity closed between 2020 and mid-2022 as