About a dozen refinery closures have been announced in the past few months, the IEA said, with the bulk of capacity closures - over 1 million bpd - happening in the US.
“There were capacity shutdowns planned for 2020 – 2021 prior to COVID-19, but the bulk of the new announcements reflect pessimism about refining economics in a world suffering from temporary demand collapse and structural refining overcapacity,” the IEA said in its monthly report.
In 2019, global crude refining capacity stood at 102 million bpd, catering for 84 million bpd of refined oil products demand. That shrank to 76 million bpd in 2020 and is expected to be 80 million bpd in 2021, the IEA said.
This week, Shell said it will halve crude processing capacity and cut jobs at its 500 000 bpd Pulau Bukom oil refinery in Singapore.
In Europe, Petroineos plans to mothball nearly half of its 200 000 bpd refinery at Grangemouth in Scotland, and Gunvor will shutter its 110 000 bpd Antwerp oil refinery in Belgium.
The outlook for refining remains mixed, with traditionally low-value naphtha and fuel oil possible bright spots in the new year, Vitol chief executive Russell Hardy told the Reuters Commodity Trading Summit this week.
He said the 1.6 – 1.7 million bpd of capacity closures already announced to take place by the end of 2021 to early 2022 could grow by a further 1 million bpd.
Plateauing fuel demand, tightening environmental rules and overseas competition have prompted several European and US refiners to opt for converting plants to produce biofuels.
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