The global oil refining industry is facing huge long-term challenges brought about by the energy transition

According to the Oil Price Today website, the global oil refining industry has not recovered from the impact of the epidemic, but it is already facing the long-term huge challenges brought about by the energy transition.

McKinsey & Company stated in the "Global Downstream Outlook to 2035" report released this month that the prospects for different regions are different, but overall, due to the decline in demand and high global production capacity, refining profits are facing downward pressure, and some inefficient refineries will Had to close. The company pointed out that the refining industry in some regions may shrink, but it will still be a very large industry, which may maintain 90% of its operating capacity in 2019 by the 1930s.

McKinsey predicts that if the current climate and energy transition policies are continued in the future, by the 1930s, the value of the global oil refining industry will drop 36% from the level of 2015 to 2019, and the average level from 2031 to 2035 will be 100 billion US dollars. Only Asia and The value of the Middle East's oil refining industry will increase. By 2035, Europe and the United States may need to permanently shut down up to 5 million barrels of production capacity per day. From 2031 to 2035, oil refining margins in the United States and Europe will be about US$2 per barrel lower than current levels. Refineries in Asia and the Middle East, especially the newer integrated and integrated refineries, will defeat the old refineries that are less resilient to fuel demand during the energy transition. If the energy transition accelerates, global oil demand will reach a peak of 101 million barrels per day in 2024, and the demand for light petroleum products will never return to the level of 2019. In this case, by 2035, the world (especially Europe and the United States) will need to shut down as much as 16 million barrels per day of refining capacity. By the 1930s, the value of the global oil refining industry will drop by 74% from the level in 2015-2019, and the average level from 2031 to 2035 will be US$40 billion.

Regardless of the speed of the transition, it is certain that refiners will need time to overcome the impact of the epidemic while preparing for the long-term impact of the energy transition. Refineries should be prepared to adapt to the new situation of long-term profit and profit margin decline and industry adjustments.