Opec anticipates a global refining surplus of nearly 4mn b/d in 2024, a substantial increase from the excess it flagged a year ago, and it has more than doubled the amount of refinery capacity it expects will close as a result.
In its latest World Oil Outlook (WOO), Opec said there is the potential for 7.7mn of incremental crude throughput being added to the global refining fleet by 2024, while refined product demand is likely to grow at 3.8mn b/d in the same period.
In its 2018 WOO, Opec said cumulative refinery production potential by 2023 was 2.5mn b/d in excess of the requirement. Then, it said upward revisions to medium-term demand have led to fewer refinery closure announcements. Today, it said more capacity is now coming from China, while the projection for incremental product demand in that country is lower by 300,000 b/d than a year ago.
As a result of this "significant build-up of excess capacity", Opec now said it expects 2.1mn b/d of refining capacity will close by 2025. A year ago it said 1mn b/d would close by 2023.
Opec said 69pc of the 7.95mn b/d of additional refining capacity to come online by 2024 is under construction or nearing the construction stage. Around 2.5mn b/d comprises projects that are not yet near construction but are considered likely to come on stream by 2024. Most of the new capacity is in the Middle East or Asia-Pacific, Opec said. Refinery closures are most likely to happen in the US, Canada and Europe, it said.