Refiners across the world are failing to fulfill global demand for diesel and gasoline, increasing high prices and worsening shortages in major users such as the United States and Brazil, as well as smaller nations such as war-torn Ukraine and Sri Lanka.
World gasoline consumption has recovered to pre-pandemic levels, but refiners’ capacity to satisfy demand is being strained by a combination of pandemic closures, Russian sanctions, and Chinese export limitations.
After the United States, China and Russia are two of the top three refining countries. All three are processing at or below peak levels, undercutting international governments’ efforts to decrease prices by releasing crude oil from reserves.
Global refining capacity fell in 2021 by 730,000 barrels a day, the first decline in 30 years. U.S. capacity is down nearly 1 million barrels from before the pandemic to 17.9 million bpd as of February.
Refiners are running full-tilt to meet demand, especially for exports, which have surged to a record. China has cut production and capped exports to curb refining activity.
A 650,000-bpd refinery in Lagos was supposed to open by 2022 but is now delayed until 2023.
Eneos Holdings (5020.T), Japan’s largest refiner, does not plan to reopen recently closed refineries.
Brazil’s state-owned Petrobras told the government that importers may be unable to secure U.S. diesel for tractors.