Refining faces turbulent future amid transition, tech & policy pressures

While closures accelerate in mature markets, modular strategies, low-carbon investments, and petrochemical integration are reshaping industry survival and positioning for 2030 and beyond

- BY ABDULAZIZ KHATTAK

GLOBAL refining stands at one of its most transformative junctures since the industry's inception. As the world races to meet climate targets and transition to low-carbon energy, refineries face structural upheaval.

Demand is plateauing, regulations are tightening, and the capital intensity of the sector leaves many players vulnerable.

Yet opportunities exist, particularly for those willing to adapt, embrace technology, and leverage integration with petrochemicals and alternative fuels.

The decade leading up to 2030 is likely to determine not only which refineries survive, but also how they redefine their role within an evolving energy ecosystem.

Refining’s predicament is further complicated by shifting geopolitics and energy security imperatives. Russia's invasion of Ukraine in 2022 reshaped global flows of crude and refined products, triggering a surge in European dependence on Middle Eastern and US suppliers. That disruption continues to ripple through markets today.

The European Union (EU), in particular, faces a structural shortage of diesel due to Russian import bans, raising refining premiums and forcing governments to maintain strategic fuel stocks.

In Asia, meanwhile, growing domestic demand and state-backed investment allow countries like China and India to exert greater influence over regional supply chains.

Analysts suggest this new multipolar dynamic will persist, with refined product trade routes becoming more fragmented and politically sensitive than ever.

GLOBAL PRESSURES & REGIONAL DIVERGENCE

The outlook for global refining is mixed and uneven. According to industry analyses, global demand for refined products is expected to peak around the mid-2020s, with the International Energy Agency (IEA) projecting consumption at approximately 86 million barrels per day (bpd) by 2027, only marginally above current levels.