Market Report Sneak Peak

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HIGHLIGHTS

• Crude and refined product markets face new geopolitical and policy uncertainties.
• The addition of new refining capacity globally will significantly slow down and more closures can be expected, in part due to fears of an eventual peak in demand.
• However, the obstacles to rapid  energy transition are starting to appear, leading to sustained long-term liquid fuel demand and supporting refining margins.
• Biofuel and EV forecasts have been significantly revised due to in large part to changing U.S. policy , impacting gasoline demand, RIN prices and refinery dynamics.

ANALYSIS & INSIGHTS

The 6th edition of the Future of Fuels report provides a comprehensive 20-year outlook on crude oil, refined products, biofuels, and EVs amid mounting geopolitical tensions and policy shifts, notably under the Trump Administration. While the global energy transition continues, this edition notes a deceleration in momentum, especially in developing economies, where petroleum demand is projected to grow through 2045. U.S. policies reversing EV subsidies and modifying biofuel mandates have led to downgraded EV adoption forecasts, an improved (though declining) outlook for long-term gasoline demand and significantly higher RIN and feedstock price projections. Crude prices are expected to remain under pressure through 2026 due to OPEC's strategy and shale oversupply, but will rebound as U.S. production wanes and OPEC regains market control.

While refining margins will be challenged over the next few years as a result of recent global capacity additions , the project pipeline is drying up and this, along with additional closures, will support improving long-term margins, particularly for distillate focused refineries. Demand for jet fuel and petrochemical feedstocks will drive future growth, while gasoline cracks decline sharply post-2030. The U.S. Gulf Coast (USGC) refiners are best positioned to grow exports as domestic demand falls. While heavy/light differential remain relatively narrow, they will grow longer term, providing additional benefits for complex USGC plants.  Regional refinery closures, mainly in PADDs 1, 2, and 5, will reshape trade flows and reinforce USGC advantages, but also provide opportunities for surviving refiners . Meanwhile, biofuel production is transitioning the U.S. from importer to exporter, especially in SAF, driven by new EPA rules and proposed RVO’s and the 45Z credit, though long-term export levels hinge on future policy and global capacity developments.

Future of Fuels, Volume 6 Webcast

A 30-minute webcast featuring Refined Fuels Analytics (RFA) executives John and Robert Auers, exploring the near-term risks and long-term outlook for crude oil, refined products, refinery margins, and the latest edition of our biannual Future of Fuels report.

Watch The Replay