The Middle East is set to be the key driver of much-needed refining capacity additions out to 2025, adding an additional 1.3mn b/d over the period according to Opec’s recently published World Oil Outlook (WOO). Kuwait alone is responsible for nearly half of this, in the form of its 615,000 b/d Al Zour refinery which is due to hit full capacity in the coming days. Other key gains will come from Oman’s Duqm and Iraq’s Karbala refineries.
Refining margins have been highly volatile over the past two years as the world lacks the requisite capacity to reliably replace sanctioned Russian exports of diesel in particular. In addition, cuts to Opec+ output, which is skewed towards medium-sour grades, have resulted in refineries in Europe in particular running a lighter crude slate and their resultant output thus tilting too far towards light ends. New capacity is needed, but securing investment is a tricky business with firms balancing multi-decade timeframes to recoup investments against the energy transition debate and potential approach of peak oil demand. (CONTINUED - 1343 WORDS)
