Global Refining Outlook 2027
The global refining industry in 2027 faces a structural tension: demand for refined petroleum products (particularly road transport fuels) is approaching — or has passed — its peak in Europe and North America, while massive new refinery capacity is being commissioned in the Middle East, Africa, and Asia. This divergence is reshaping global crack spreads, trade flows of refined products, and long-run investment economics for refinery operators.
For crude oil benchmark context, see our Brent crude glossary entry. For upstream production context, see our upstream-downstream glossary entry. For shipping of refined products, see our product tanker glossary entry.
Major new refinery capacity 2026–2027
| Project | Country | Capacity (b/d) | Status 2026 |
|---|---|---|---|
| Dangote Refinery (Lekki) | Nigeria | 650,000 | Ramping up; partial operations from 2024 |
| Al-Zour | Kuwait | 615,000 | Operational; export-focused |
| Karbala | Iraq | 140,000 | Operational 2026; domestic supply focus |
| Rongsheng/ZPC (Zhoushan) | China | 400,000 | Expanding petrochemical integration |
| SATORP expansion (Jubail) | Saudi Arabia | +50,000 | Upgrade to complex configuration |
The Dangote Refinery represents the most transformative project for African markets: designed to supply Nigeria (population 220 million, historically a net fuel importer despite being Africa's largest oil producer) and export to West African neighbours. When fully operational, it could significantly reduce Nigeria's ~$10bn/year refined product import bill. For subsidy context in Nigeria, see our fuel subsidy glossary entry.
Crack spreads: 2022 peak to 2026 normalisation
| Period | Gasoline crack ($/bbl) | Diesel crack ($/bbl) | Driver |
|---|---|---|---|
| 2019 (pre-COVID) | $10–15 | $15–20 | Normal operating margins |
| 2020 Q2 (COVID nadir) | $-5–5 | $5–10 | Demand collapse; refineries cutting runs |
| 2022 H1 (peak) | $50–80 | $60–90 | Post-COVID demand recovery + Russia supply loss |
| 2024 | $15–25 | $20–30 | New capacity additions; demand normalisation |
| 2026 (current) | $12–22 | $18–28 | Structural pressure from new Middle East/Asian capacity |
European refinery closures and structural decline
Europe's refining sector has undergone significant rationalisation:
- Net capacity reduction since 2009: approximately 3.5–4.0 mb/d of European capacity permanently closed — equivalent to roughly 20–25% of peak capacity
- Grangemouth (Scotland): Petroineos refinery closed 2025; Scotland now imports all refined products — a major shift for North Sea crude supply chains
- Eastern Europe feedstock disruption: Hungarian (MOL), Slovak (Slovnaft), and Czech (Litvínov) refineries historically relied on cheap Russian Urals crude via Druzhba pipeline; post-2022 sanctions alternatives (North Sea, Caspian via Adriatic) cost $3–8/bbl more
- EU ETS carbon cost: Refinery CO2 emissions face growing carbon costs — ~€60–80/tonne CO2 in 2026 — adding €5–15/tonne of product to refinery operating costs
For the Russia oil sanctions context, see our Russia oil sanctions 2026.
As road transport fuel demand peaks, refiners globally are investing in deeper integration with petrochemical plants — converting surplus naphtha and gas oil into plastics, chemicals, and lubricant base oils rather than road fuels. Saudi Aramco's Amiral complex (Saudi Arabia), Kuwait NPC, and Chinese mega-complexes (Hengli, Rongsheng) all incorporate large-scale naphtha crackers and aromatics units. This strategy maintains refinery utilisation rates as vehicle fuel demand declines, but introduces exposure to petrochemical market cycles. See our oil refinery economics guide for a detailed breakdown of refinery margin components.
Petrochemical integration and the post-peak fuels strategy
The IEA's Net Zero Emissions scenario sees road transport fuel demand peaking by 2025–2027 globally. In this environment, refinery investment economics are being fundamentally reassessed:
- Simple hydro-skimming refineries (low conversion, limited flexibility) face structural closure as margins compress
- Complex refineries with deep conversion (hydrocracking, coking, fluid catalytic cracking) that can maximise diesel/jet yield from heavy crude will outperform
- Refineries co-located with petrochemical complexes can divert feedstock to higher-value chemicals as fuel margins compress
- SAF (sustainable aviation fuel) production is emerging as a high-value niche for European refiners facing transition pressure
For the EV transition context affecting fuel demand, see our EV battery cost 2026. For shale oil supply context, see our shale oil outlook 2027.
Frequently asked questions
What is a crack spread in refining?
- A crack spread is the margin a refinery earns by converting crude oil into refined products. The standard 3-2-1 benchmark = 3 barrels crude → 2 barrels gasoline + 1 barrel diesel. Crack spreads spiked to $50–90/bbl in 2022 (post-COVID + Russia supply shock), then normalised to $12–28/bbl range in 2024–2026 as new capacity came online.
Where are new refineries being built in 2026–2027?
- Key new capacity: Dangote Refinery, Nigeria (650,000 b/d — world's largest single-train); Al-Zour, Kuwait (615,000 b/d); Karbala, Iraq (140,000 b/d); Chinese mega-complexes (Rongsheng/ZPC, Hengli, Shenghong adding ~500,000–700,000 b/d combined). Europe has no new builds — it is a net capacity reducer.
Are European refineries closing?
- Yes — ~3.5–4.0 mb/d of European refining capacity closed since 2009. Key pressures: declining fuel demand (EVs), EU ETS carbon costs (~€60–80/t CO2), Russian crude feedstock disruption (Druzhba pipeline cost premium), and competition from newer Middle East/Asian refineries. Grangemouth (Scotland) closed in 2025.