BloombergNEF: Strong recovery in global oil refining capacity expected between 2026-2030

According to the Global Oil Refinery Outlook report of the international energy analysis and research organization BloombergNEF (BNEF), a strong recovery is expected in the 2026-2030 period after the decline in global oil refinery capacity last year.

It is estimated that global net refinery capacity will increase by approximately 4.2 million barrels per day during this period. This amount is considered to be 162 percent more than the net capacity increase recorded in the previous 5-year period.

Approximately 2.9 million barrels per day of this increase is expected to come from investments including capacity increases in existing refineries. It is anticipated that the capacity increase in these projects will take place in Africa, India, China, other countries of the Asia Pacific, the Middle East and Latin America.

New refinery investments built from scratch are expected to add approximately 1.5 million barrels per day to capacity. These investments are mainly concentrated in Africa, India, China and other countries of the Asia Pacific.

In the same period, the refinery capacity to be decommissioned, especially in Europe and North America, is expected to reduce global capacity by approximately 200 thousand barrels per day.

BNEF points out that the projected capacity increase is well above the expected demand growth for refined petroleum products.

It is predicted that if the planned projects are completed, the increase in refinery capacity may exceed the demand for petroleum products, which may increase competition between refineries and reduce refinery margins.

95 percent of the capacity increase comes from Africa and Asia Pacific

Africa and Asia Pacific are expected to account for approximately 95 percent of global net refining capacity growth by 2030.

In addition to strong petroleum product demand expectations, policies to reduce dependence on imports and investments in exports and petrochemical integration are effective in the capacity increase in these regions.

In the short term, China and India stand out. It is estimated that the two countries will account for 71 percent of the total new refinery capacity expected to be commissioned in 2026 and 2027. Most of the projects for this period are already operational or in the construction phase.

On the other hand, it is stated that the risks of delay or cancellation have increased since a larger part of the capacity planned for 2028-2030 is in the early project stage. According to BNEF's tracking, nearly half of the capacity increases planned in 2026-2030 are already in operation or under construction.

Capacity losses may continue in Europe and the USA

It is estimated that the rate of development of refinery capacity varies by region, which will also lead to differences in the trade flows of crude oil and petroleum products.

It is assessed that increasing refinery capacity in China may lead to excess supply, which may bring about additional consolidation among smaller independent refineries.

While investments in India and Africa support the countries' and the region's goals of reducing foreign dependency on petroleum products, it is anticipated that some refineries in Europe and the USA may continue to be decommissioned.

The competitiveness of refineries in the Atlantic Basin is increasing

According to BNEF, the Israel/US-Iran War is causing disruptions in the trade flows of oil products in the Middle East and refinery raw materials from the Persian Gulf.

While it is evaluated that these developments increased the competitive advantage of refineries in the Atlantic Basin, it is stated that the impact of the war on medium-term global refinery capacity investment plans remains limited.

However, it is stated that the conflicts in the region strengthen the importance of investments to increase the resilience of storage, pipelines and logistics infrastructure.