The energy transition’s toll on refining

Slower demand growth and diverging trends between products and between East and West will drive the capacity additions, refinery closures, changes to refinery configurations and inter-regional trade. Capacity increases in growing markets, which results in lower crude throughputs in mature markets. Asia faces the dual challenge of meeting its shortages of light distillates and finding export markets for its surplus middle distillates. In the West, mainly in Europe and the US, we see a completely opposite situation. Surplus light products and a deficit in middle distillates. As we add more capacity in the East, we expect refiners in the West to be constrained by gasoline surplus. To manage the situation, we expect a combination of more exports of light products towards the East and lower crude runs in the West. Significant investments in the East increase the threat of closures in the West.