The oil refining market deals in the process of separating crude oil into usable refined products such as gasoline, diesel, jet fuel, fuel oils, liquefied petroleum gas, petrochemical feedstocks and other products. The refining process involves complex physical and chemical processes that fractionate crude oil into its various components. The main advantages of oil refining are availability of petroleum based energy sources and production of transportation fuels and raw materials for multiple industries. With fast industrialization and rising population, the global demand for petroleum products has increased significantly.
The oil refining market is estimated to be valued at USD 1,838.46 Bn in 2024 and is expected to reach USD 2,469.1 Bn by 2031, growing at a compound annual growth rate (CAGR) of 4.3% from 2024 to 2031.
Key Takeaways
Key players: Key players operating in the oil refining market include Royal Dutch Shell, Exxon Mobil, China National Petroleum Corporation (CNPC), BP, and Saudi Aramco. These companies collectively account for over 25% of the global refining capacity.
Growing demand: Growing automotive sector and rising income levels in developing economies are driving the Oil Refining Market Demand for gasoline and diesel. Additionally, increasing air passenger traffic is boosting the demand for jet fuel globally.
Technological advancements: Oil refining companies are investing heavily in research & development to optimize refinery configurations and develop new catalytic processes. Technologies such as integrated refinery information systems, real-time process optimization, and energy management systems are enhancing productivity.
Market Trends
Shift towards petrochemical feedstock: With declining fuel margins, oil refiners are shifting their focus towards more valuable petrochemical feedstock to enhance profitability. Petrochemicals account for over 50% of total refining margins.
Advance refining technologies: New technologies such as Merox process, mild hydrocracking, and alkylation are helping refineries to maximize production of high-value products and minimize environmental footprint. Companies are investing in R&D to develop sustainable and low-carbon refining processes.
Market Opportunities
Growing aviation fuel demand: With increasing air passenger traffic globally, the demand for jet fuel or aviation turbine fuel (ATF) is projected to grow over 4% annually until 2030, thereby opening significant opportunities for refiners.
Higher refined product exports from US: The massive expansion in US crude oil production has boosted domestic refined product exports. Countries in Latin America and Asia present major export opportunities for US refiners.
Impact of COVID-19 on Oil Refining Market growth
The outbreak of COVID-19 pandemic and subsequent lockdowns adversely impacted the oil refining market. Restrictions on travel and transportation led to a steep decline in fuel demand. This triggered a massive fall in crude oil prices in early 2020. Many refineries reduced operations or even shut down temporarily as inventory piled up. Employment in refineries was also affected significantly. However, with economies gradually opening up in late 2020 and 2021, oil demand and refinery runs have rebounded. But some weakness still persists in certain fuel segments like jet fuel that depends heavily on air travel. The oil refining industry will have to carefully balance refinery runs with uncertain demand outlook going forward.
Geographical concentration of Oil Refining Market
In terms of value, the oil refining market remains highly concentrated in Asia Pacific and North America regions. This is because some of the largest refining hubs and companies are located in countries like China, India, USA and Canada. For instance, China has become the world's largest crude oil refining country today. It has heavily invested in developing new refineries and expanding capacities over the past two decades. Similarly, the USA and Canada jointly account for around one-fifth of global refining capacity. Going forward, Middle East countries are also well positioned to strengthen their share owing to abundant low cost oil reserves and strategic locations for exports.
Fastest growing region for Oil Refining Market
India is projected to be the fastest growing market for oil refining industry over the coming years. The country is currently modernizing its refining infrastructure and aiming to raise domestic refining capacity significantly from the current 250 million tonnes per annum level. Major global oil companies as well as Indian public sector firms have launched large investments towards construction of new coastal and pan-India refineries. This would strengthen India's energy security as well as create export opportunities. Additional factors supporting refining growth include rising domestic fuel demand driven by strong economic expansion and government push for cleaner fuels. Thus, India presents major upside for refiners targeting high growth emerging markets.
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About Author:
Ravina Pandya, Content Writer, has a strong foothold in the market research industry. She specializes in writing well-researched articles from different industries, including food and beverages, information and technology, healthcare, chemical and materials, etc.
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