Global Refining Crunch Could Keep Fuel Prices High Into 2027
Iraq Hikes Oil Exports via Hormuz in Boon for Asian Refiners What I Cover Tsvetana Paraskova is an energy and commodities journalist who has contributed to Oilprice.com for nearly a decade, covering global energy markets, commodities,… Damaged refineries in the Middle East and Russia and insufficient capacity elsewhere to offset the supply disruptions will likely keep global fuel prices elevated into the next year, analysts say.
The Middle East conflict and the Iranian and Houthistrikeson Persian Gulf facilities have slashed supply and deliveries from the region, while intensified Ukrainian strikes on Russian refineries have prompted a ban on diesel exports out of Russia.
As a result, the global fuel markets are tightening, also because capacity elsewhere, including in the United States, cannot offset the loss of refined product flows.
“Refining capacity will not come back so soon,” Nikhil Agarwal, managing director of Globestar Energy, said at Energy Trading Week Middle East in Dubai, as carried byThe National.
“Bapco is gone, the GTL Qatar is gone, Russian refineries are gone.
It will take years to build them back and bring them on board,” the expert said.
“Crude is surplus globally, but there is no refining capacity available to refine it and bring it to market,” Agarwal said, echoing other experts who say that the fuel – especially diesel – marketsshow the real stressin the oil complex.
Refinery crude throughputs in July remained nearly 5 million barrels per day (bpd) below year-ago levels, at 80.9 million bpd, “with capacity elsewhere in the system currently unable to offset product supply bottlenecks,” the International Energy Agency (IEA) said in itsmonthly reportin August.
Refining fundamentals are very tight and getting tighter with the issues in Russia and the Middle East, Brian Mandell, Executive Vice President of Marketing & Commercial at Phillips 66, said on theQ2 earnings callin early August.
“We have 7 million barrels a day of refineries down in Asia and the Middle East and another 1.4 million barrels down in Russia.
And the refineries, depending on the damage and the ability to get spare parts, are going to take a good long time to get back online,” the executive added.
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| Product | Price | Change |
|---|---|---|
| Brent Crude | $102.14/bbl | +0.34% |
| WTI Crude | $96.90/bbl | +0.21% |
| EN590 Diesel | $846/MT | +0.18% |
| Jet Fuel A-1 | $1090/MT | +0.55% |
| Mazut M100 | $450/MT | -0.15% |
| Bitumen 60/70 | $470/MT | +0.08% |
| Sulphur Gran 99.5% | $470/MT | -0.44% |
| Urea 46% Gran | $650/MT | +1.12% |
| NPK 16-16-16 | $460/MT | -0.28% |
| Nat Gas TTF | $15.42/MMBtu | +0.92% |
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