Refining Capacity Update
Nov. 10, 2023
As we approach the end of 2023, we are seeing an increasing number of refineries in the Middle East delaying their full ramp up and we will not be surprised if with the next revision of capacity data, numbers shift firmly towards 2024 and beyond. Still, the existing expansions (Al Zour, Jizan, Duqm) are expected to play a pivotal role in supplying the West, especially in the context of increasing winter demand for gasoil. Indeed, Kpler data shows that European refinery utilization for October was at 80%, virtually unchanged from previous months and with the forecast pointing to an average utilization of 82% for the remainder of the year. This implies a reliance in imports from regions with expanding balances such as the Middle East and the Far East (China). For the latter, we note the possibility of some export quota trading from LSFO to transport fuels (source: FGE) in order to meet the diesel shortage in the West of Suez markets during the winter months.
Figure 1: Refining Capacity (Y-o-Y Difference)
Source: Kpler, McQuilling Services
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