IMO 2020: Oil Refining Capacity to Grow at Record Pace
Global oil refining capacity is set to increase at its fastest pace on record this year, possibly boosting stocks of products such as diesel, gasoline and marine fuel, the International Energy Agency said.
Oil refining capacity will rise by 2.6 million barrels per day (bpd) and demand for refined products by around 1.1 million bpd, the IEA said in a monthly report.
It was not clear yet what that meant for margins, which slumped as the price of crude rose last year, said the Paris-based IEA, which coordinates the energy policies of industrialized countries.
"This (demand growth) utilizes only half of the new capacity coming on stream. If refining margins are supported by accommodating crude prices, utilization rates will not decline. This should mean that product stocks will increase," it said.
An increase in stocks of refined products could be "useful", the IEA said, ahead of the implementation next year of regulations by the International Maritime Organization to reduce sulfur content in shipping fuel.
Margins remain under pressure from rising oil throughput, which hit a historic high last month at 84.2 million bpd. Refineries will process 83.4 million bpd this year, compared with 82.2 million bpd last year, according to the agency.
"The global refining industry is facing a challenging 2019 ... If average crude prices continue moving higher for the third consecutive year, refining margins may decline to levels that force slowdown in some refining regions," the IEA said.
(Reuters reporting by Shadia Nasralla; Editing by Dale Hudson)