That’s the amount of refining capacity the world has lost since 2019, according to S&P Global Commodity Insights.
Meanwhile, the International Energy Agency expects global demand for oil products to exceed 2019 levels by over 1 million barrels a day this year.
That gap, analysts say, is one reason gasoline, diesel and aviation fuel prices are likely to remain high relative to crude oil.
New refineries that could add 3 million barrels per day more capacity are slated to come online this year, says Rick Joswick, head of global oil analysis at S&P Global Commodity Insights. But it often takes a year or more for a refinery to reach its full potential.
“Refining capacity is expected to remain tight this year,” Mr. Joswick said, “with supply improvement largely lagging into 2024.”
So far, the refining deficit has pushed up jet fuel and diesel prices more than gasoline. But with the driving season approaching, some experts believe gas is poised to catch up as growing demand for gas will continue to weigh on refiners. Another factor could be a potential shortage of a muddy substance called vacuum gas oil, or VGO, which the US imported from Russia until recently.
“The real problem is this tiny market that nobody is looking at,” says Francesco Martoccia, energy strategist at Citigroup.
Read more about the VGO issue here.