The International Energy Agency (IEA) has revised downwards its estimates for the overall operation of refineries, due to insufficient profit margins. This revision comes against a backdrop of volatility in crude oil prices and tensions on global energy markets.
In 2024, the IEA now forecasts refining throughput of 82.8 million barrels per day (bpd), a decrease of 180,000 bpd from its previous estimates. For 2025, the throughput is revised to 83.4 million b/d, a drop of 210,000 b/d. This trend reflects increasing pressure on refineries, particularly in China and Europe, where margins continue to deteriorate.
Impact of Margins on Refineries
Refining margins fell further in September as spreads between the price of fuels such as gasoline, jet fuel and diesel deteriorated, despite an improvement in crude prices in a relatively tight market. This situation has pushed the IEA to revise its forecast downwards for the overall operation of refineries this year.
Reduction in China and Growth Prospects
So far, the IEA has reduced its overall operating forecast for 2024 by 500,000 b/d, mainly due to lower throughput in China. However, it anticipates a recovery in Chinese throughput in 2025 with the commissioning of the new Yulong refinery. This green refinery, with a capacity of 400,000 b/d, began testing at the end of August and is expected to operate at around 65% of its capacity during the test phase, according to data from S&P Global Commodity Insights.
Perspectives pour l’Europe
Despite the downward revisions, the IEA forecasts an annual increase in refinery operations of 540,000 b/d in 2024 and 610,000 b/d in 2025. However, the agency reiterated its estimate of a reduction of 240,000 b/d in Europe in the fourth quarter, while indicating that further cuts are possible if margins continue to deteriorate.
Pressure on European Refineries
Falling profits are putting increasing pressure on refineries, with analysts at Commodity Insights reducing their fourth-quarter 2024 operating forecast by 50,000 b/d due to reports of economic cutbacks in Europe and elsewhere. In September, the Sarroch refinery in Italy, with a throughput of 300,000 b/d, as well as the Mediterranean refineries Eni and Repsol, reduced their operating rates by up to 10%, with stagnant margins making high production volumes less attractive.
Outlook for Rebound in the OECD
However, refining throughputs in the Organization for Economic Co-operation and Development (OECD) are expected to rebound in December following the end of seasonal maintenance, the IEA said. Many refineries in Europe, including Germany, Lithuania, the Netherlands and the United Kingdom, are undergoing scheduled maintenance, due to be completed in November, according to data from Commodity Insights.
