The Dog Days Are Over - U.S. Refiners Could Benefit from Struggles Refineries Are Facing Abroad

As the world economy tries to dust itself off after COVID, increased demand for transportation fuels coupled with tight supplies has become a pain. The shortage escalated to crisis levels this spring and summer when, in response to Russia’s invasion of Ukraine, sanctions eliminated Russian exports of crude oil and intermediate feedstocks to the U.S. and severely reduced flows to Europe. While Russia has been able to find some alternate markets, its overall product exports are down significantly. Adding to these product-supply reductions are policy decisions by Putin’s allies in China to reduce their product exports to a trickle. Chinese exports had been an important part of regional supply in recent years, but authorities there have decided to decrease the number and size of export quotas issued, leaving many refineries in China operating at rates well below their capabilities. In today’s RBN blog, we take a closer look at how developments in Russia and China have played a major role in the current global shortage of refined products. 

Over the next couple of years — and the next couple of decades — global supply/demand dynamics in refined products markets will be driven by two critically important factors. The first is the understandable reluctance of refiners to expand capacity in the face of climate policy and ESG headwinds. The second is a growing gap between policymakers’ aggressive energy-transition goals and the global pivot to a renewed focus on energy security brought about by the Russia-Ukraine war and worries about China’s global ambitions. These factors, which will fuel the prospects for constrained supply and higher-for-longer demand, have far-reaching implications, not only for refinery owners but also for E&Ps, midstreamers, exporters, energy industry investors and policymakers, all of whom need to gain a clearer understanding of what’s just ahead — and what’s over the horizon, just out of sight. In today’s RBN blog, we discuss key findings in “Future of Fuels,” a new, in-depth report by RBN’s Refined Fuels Analytics practice on everything you need to know about U.S. and global supply and demand for gasoline, diesel, jet fuel and biofuels over the short-, medium- and long-term.

Over the next couple of years — and the next couple of decades — global supply/demand dynamics in refined products markets will be driven by two critically important factors. The first is the understandable reluctance of refiners to expand capacity in the face of climate policy and ESG headwinds. The second is a growing gap between policymakers’ aggressive energy-transition goals and the global pivot to a renewed focus on energy security brought about by the Russia-Ukraine war and worries about China’s global ambitions. These factors, which will fuel the prospects for constrained supply and higher-for-longer demand, have far-reaching implications, not only for refinery owners but also for E&Ps, midstreamers, exporters, energy industry investors and policymakers, all of whom need to gain a clearer understanding of what’s just ahead — and what’s over the horizon, just out of sight. In the encore edition of today’s RBN blog, we discuss key findings in “Future of Fuels,” a new, in-depth report by RBN’s Refined Fuels Analytics practice on everything you need to know about U.S. and global supply and demand for gasoline, diesel, jet fuel and biofuels over the short-, medium- and long-term.