Energy Shots #118:

Global crude markets face several significant questions heading into 2025, including:

1. How long will OPEC+ police the market?

2. Will Chinese demand rebound on stimulus measures?

3. Will India cement its place as the new driver of global petroleum demand?

4. How long can markets discount low global inventories?

5. How long can global markets ignore low US inventories with nearly a year of sequentially flat production numbers?

These questions will further evolve in a few short weeks with the inauguration of President-elect Trump and his administration’s updated energy, trade, and regulatory policies.

Ahead of these changes, the next three weeks of Energy Shots reports will focus on notable infrastructure, fundamental, and geopolitical themes for global energy markets in 2025.

Energy Shots #118 begins this mini-series with an update to global refining capacity.

2025+ Global Refinery Capacity

In the last two decades, global refining capacity growth has shifted to regions with the fastest petroleum demand growth. According to EIA data, the US, Western Europe, and Japan accounted for approximately 45% of the 82.9 MMb/d of total world refinery capacity in 2000. By 2023, this share fell to approximately 1/3 of total world refinery capacity as India, China, and the Middle East rapidly expanded refining infrastructure to meet domestic demand growth.

Between 2014 and 2023, global refining capacity grew by an average of 681.7 Kb/d per year, bringing total crude processing capacity to approximately 103.5 MMb/d by the start of 2024.

• According to the Energy Institute’s 2024 data, projects in Asia and the Middle East have accounted for nearly all global refinery capacity growth over the past decade, with these two regions respectively increasing capacity at a CAGR of 2.6% and 1.0% between 2014-2023 vs. 0.25% for the US and -0.56% for Europe.

A tally of new construction and facility expansions shows global refining capacity will grow at nearly double the average pace of the last decade in 2025, gaining approximately 1.2 MMb/d as China’s 400 Kb/d Shandong and Mexico’s 340 Kb/d Dos Bocas refineries progress through commissioning phases to commercial operations.

Atlantic Basin Competition Picks Up In 2025

Mexico’s 340 Kb/d Dos Bocas and Nigeria’s 650 Kb/d Dangote refinery projects account for approximately 46% of the 2.14 MMb/d of 2024-2025 global refinery expansions and are the only non-Asian/non-Mideast sources of capacity growth over the next four years.

Despite officials repeated promises that Dos Bocas would reach full capacity by end-2023 (and after consecutive delays, by end-2024), the latest official numbers show Pemex’s newest refinery ran at just ~17% of its 340 Kb/d capacity in November.

• Dos Bocas processed 59,466 bpd of crude in November, producing 7 Kb/d of diesel, 1.5 Kb/d of gasoline, and 5.7 Kb/d of pet. coke.

Meanwhile, Nigeria’s 650 Kb/d Dangote refinery hit 50% capacity utilization in November and appears on track for >70% capacity utilization by the second half of 2025.

Nearly 1 MMb/d of new Atlantic Basin refining capacity, relatively stagnant regional demand growth, and ongoing trade disruptions through the Suez Canal will likely add competitive headwinds to refiners in the US and Europe.

• Nigeria’s Dangote refinery poses concentrated risks for European refiners, while Mexico’s Dos Bocas will likely pressure US refining margins upon reaching full commercial operations as Pemex restricts Maya exports and reduces product imports.

Asia Controls 2026+ Refining Capacity Growth

Beyond 2025, the next wave of refinery capacity additions swings decisively back to Asia.

As shown in the chart below, planned refinery projects in India and China will account for approximately 87% of the 2.8 MMb/d of global refinery capacity growth between 2026 and 2028, indicating the region will continue to be the primary source of global crude demand growth over the next half-decade.

See you next Sunday.

ES.

This commentary contains our views and opinions and is based on information from sources we believe are reliable. This commentary is for informational purposes, should not be considered investment advice, and is not intended as an offer or solicitation concerning the purchase and sale of commodity interests or to serve as the basis for one to decide to execute derivatives or other transactions. This commentary is intended for Mobius clients only and is not considered promotional material.