Oil Refining Market Overview, 2025-30

The industry began with the basic need to extract kerosene from crude oil for lighting purposes, but over the decades, it has grown into a cornerstone of modern industrial civilization. Today, oil refineries produce a wide range of valuable petroleum products, including gasoline, diesel, jet fuel, heating oil, liquefied petroleum gas (LPG), and petrochemical feedstocks, which are essential to transportation, manufacturing, electricity generation, and countless consumer goods. However, with growing environmental concerns and the push towards sustainability, refiners are now focusing their messaging on cleaner fuel technologies, low-carbon processes, and corporate responsibility. Marketing strategies increasingly highlight innovations such as renewable diesel production, carbon capture utilization and storage (CCUS), and hydrogen integration. Major players also leverage digital campaigns and partnerships with auto and aviation sectors to align their brands with cleaner energy narratives. Meanwhile, the use of certifications and environmental labeling has become an important promotional tool, helping companies differentiate their fuels as "greener" or "eco-compliant" in increasingly conscious consumer markets. For instance, the International Maritime Organization’s IMO 2020 regulation, which limits sulfur content in marine fuels, forced refineries worldwide to upgrade technologies and adapt their production processes. Similarly, many countries enforce Euro-style vehicle fuel standards (such as Bharat Stage norms in India) that influence the type of fuels produced. Refineries must also comply with emission trading systems (ETS), fuel carbon intensity regulations, and safety certifications for operational compliance. Additionally, refiners are increasingly expected to align with ESG (Environmental, Social, and Governance) reporting standards and to disclose climate-related risks as mandated by financial and environmental authorities.

According to the research report, "Global Oil Refining Market Overview, 2030", the Global Oil Refining market was valued at more than USD 2.53 trillion in 2024, with the CAGR of 5.08% from 2025-2030. The enforcement of low-sulfur fuel standards, greenhouse gas emissions limits, and the promotion of cleaner fuels have compelled refineries to adopt desulfurization units, hydrogen plants, and carbon capture technologies. While such compliance involves significant capital expenditure, it also creates opportunities for refiners to produce high-margin, low-emission fuels and to cater to environmentally conscious markets. The transition toward renewable energy and electric vehicles (EVs) is another key factor influencing the sector. Though it poses a long-term threat to gasoline and diesel demand, it has simultaneously encouraged refiners to diversify into biofuels, green hydrogen, and sustainable aviation fuel (SAF), opening new revenue streams. For instance, several major oil companies are converting aging refineries into biorefineries to meet rising demand for renewable diesel in North America and Europe. Opportunities in the market are also being fueled by technological advancements and digital transformation. The use of AI, predictive analytics, and IoT in refining operations is improving efficiency, reducing downtime, and optimizing fuel yields, giving a competitive edge to technologically agile players. In February 2025, Senegal launched oil refining with 90,000 tons produced. The Société Africaine de Raffinage (SAR) announced that it has processed domestic extraction. The launch is a huge contribution to the regional oil refining market. Supporting events like the increased focus on energy security due to geopolitical tensions have also elevated the importance of domestic refining capacity, pushing nations to invest in local production to reduce reliance on foreign refined fuels.

Market Drivers

• Rising Global Energy Demand: One of the most prominent drivers of the global oil refining market is the consistent rise in energy demand, particularly from emerging economies such as India, China, and countries across Southeast Asia and Africa. As populations grow and urbanization accelerates, the need for gasoline, diesel, jet fuel, and petrochemical feedstocks has significantly increased. Industrial expansion and the growing number of vehicles on the road further fuel the need for refined petroleum products. This rising consumption places pressure on refiners to expand capacity and improve efficiency to meet both domestic and export demands.
• Technological Advancements in Refining Processes: Refineries are undergoing a technological transformation with the integration of advanced processing technologies such as hydrocracking, desulfurization, and digital automation. These innovations are enabling more efficient operations, lower emissions, and the ability to process a wider variety of crude oil types, including heavier and sour grades. Additionally, digital tools such as AI, predictive maintenance, and real-time analytics are helping refiners optimize throughput and reduce downtime, making refining operations more cost-effective and competitive in a volatile energy landscape.

Market Challenges

• Stringent Environmental Regulations: A significant challenge for the global oil refining industry is complying with increasingly strict environmental policies related to greenhouse gas emissions, air pollution, and fuel quality standards. Governments across regions such as the EU, North America, and parts of Asia are enforcing carbon-neutral targets and mandating the use of cleaner fuels, which requires substantial investment in upgrading refinery infrastructure. Many older refineries, particularly in developing regions, struggle to meet these regulations, resulting in potential shutdowns or costly retrofits.
• Volatility in Crude Oil Prices: Crude oil price fluctuations, often influenced by geopolitical tensions, OPEC+ production decisions, and global economic conditions, pose a continual threat to profitability and stability in refining operations. When oil prices are volatile, refiners face uncertainty in their margins, particularly when the spread between crude prices and refined product prices narrows. This unpredictability complicates supply chain planning, investment strategies, and long-term project development within the industry.

Market Trends

• Shift Toward Clean and Renewable Fuels: The oil refining industry is experiencing a significant shift toward the production of cleaner fuels and alternative energy sources. Refineries are increasingly investing in renewable diesel, biofuels, and hydrogen production to adapt to the global energy transition. Many players are also exploring carbon capture and storage (CCS) technologies and integrating renewable feedstocks to reduce their carbon footprint. This transition is being accelerated by government incentives and consumer demand for greener energy solutions.
• Consolidation and Capacity Rationalization: With margins under pressure and regulatory demands increasing, the industry is witnessing consolidation through mergers and acquisitions. Major oil companies are acquiring smaller or less efficient refineries, or shutting them down altogether, to streamline operations and focus on more profitable assets. In parallel, there is a trend of capacity rationalization, particularly in developed markets like Europe and North America, where several aging refineries are being decommissioned or converted into bio-refineries. This trend is reshaping the global refining landscape, concentrating capacity in regions with higher efficiency and growth potential.

The growth of diesel/gasoil fuel type in the global oil refining industry is primarily driven by its essential role in powering commercial transportation, industrial machinery, and backup power systems across both developed and emerging economies.

Diesel, also known as gasoil in several regions, has witnessed growing demand in the global oil refining industry due to its unmatched utility across multiple sectors, making it a strategic fuel type in economic and industrial development. Its high energy density and fuel efficiency make it indispensable for the heavy-duty transportation sector, including trucks, buses, ships, and railways, which form the backbone of logistics and supply chain networks worldwide. As global trade and e-commerce expand, especially in emerging markets across Asia, Africa, and South America, there is a corresponding surge in the movement of goods, significantly boosting diesel consumption. Additionally, diesel is extensively used in construction, mining, agriculture, and manufacturing machinery, where alternatives like gasoline or electricity are either impractical or economically unviable, particularly in remote and rural areas. In developing countries, unreliable electricity grids have further propelled the use of diesel-powered generators for industrial and residential backup power, especially in critical infrastructure like hospitals and data centers. The refining industry is responding by optimizing output towards middle distillates such as diesel, improving hydrotreating and hydrocracking capabilities to meet the quality and environmental standards such as ultra-low sulfur diesel (ULSD), which addresses growing regulatory pressure to reduce emissions. Moreover, in regions with cold climates like Europe, diesel remains the preferred fuel for heating and transport due to its reliability and performance in lower temperatures. While there are global shifts toward cleaner energy, diesel retains a strong foothold due to slow electrification in heavy-duty transport and a lack of infrastructure in several parts of the world. The marine sector's switch to lower-sulfur fuels in line with IMO 2020 regulations has also led to refining adjustments that benefit high-quality diesel production.

The electricity generation application is growing in the global oil refining industry due to rising energy demands and the need for reliable backup and off-grid power solutions in regions with unstable or insufficient electricity infrastructure.

The increasing prominence of electricity generation as an application type in the global oil refining industry is closely tied to the escalating global energy demand and the persistent challenges of energy access, reliability, and infrastructure gaps, particularly in emerging and developing economies. As industrialization, urbanization, and digitalization accelerate worldwide, the demand for stable electricity supply has surged, putting pressure on existing grids that often struggle with capacity, aging infrastructure, or geographical limitations. In regions where the central power supply is erratic or underdeveloped such as parts of Africa, Southeast Asia, and Latin America refined petroleum products like fuel oil and diesel are vital for generating electricity through thermal power plants and diesel generators. These refined fuels offer a reliable and quickly deployable source of energy for rural electrification, mining operations, remote construction sites, disaster response, and military operations, making them indispensable in bridging the energy access gap. Moreover, in industrialized nations, electricity generated from refined oil products plays a critical role during peak load demands and as backup power for essential services like hospitals, telecom towers, airports, and data centers where uninterrupted power is crucial. The refining industry is responding to this demand by enhancing product quality and refining flexibility to ensure the availability of low-sulfur fuel oils and cleaner-burning distillates suited for modern power generation technologies. Additionally, geopolitical instability and natural disasters have highlighted the importance of energy security and fuel-based power generation, leading to strategic reserves and mobile generation units that often rely on refined oil products.

The growth of Natural Gas Liquids (NGLs) as a feedstock in the global oil refining industry is primarily driven by their increasing availability, cost-effectiveness, and versatility in producing high-value petrochemicals and transportation fuels.

Natural Gas Liquids (NGLs), which include ethane, propane, butanes, and natural gasoline, are experiencing rising demand as a feedstock in the global oil refining and petrochemical industry due to a combination of abundant supply, economic advantages, and their critical role in producing high-value products. The shale gas boom in the United States, along with increased natural gas production in the Middle East and other regions, has dramatically expanded the global supply of NGLs, making them more accessible and competitively priced compared to traditional crude oil-based feedstocks. Refiners and petrochemical companies are increasingly integrating NGLs into their operations to enhance product flexibility and profit margins, especially given their high yield of ethylene, propylene, and other light olefins, which are foundational building blocks for plastics, synthetic rubber, and various industrial chemicals. Ethane, in particular, is favored for its high ethylene yield in steam crackers, making it a preferred feedstock in the petrochemical sector. Moreover, propane and butanes are used in alkylation units to produce high-octane gasoline blending components, supporting cleaner and more efficient fuel production. NGLs also contribute to refining efficiency by improving hydrogen production and enhancing the output of lighter, more environmentally friendly fuels. As refiners face tightening environmental regulations and a global shift toward cleaner energy, NGLs provide a lower-carbon alternative to heavier hydrocarbons, helping to reduce overall emissions and align with sustainability goals. The development of infrastructure for gathering, processing, fractionating, and transporting NGLs has further facilitated their integration into refining systems, especially in regions like North America and the Middle East where investments in NGL export terminals and processing plants are accelerating.

The growth of deep conversion complexity type in the global oil refining industry is primarily driven by the need to maximize high-value product yields from heavy and sour crude oils while meeting stringent environmental regulations and evolving fuel quality standards.

Deep conversion refining technologies are gaining significant traction in the global oil refining industry due to their ability to extract maximum value from increasingly available heavy and sour crude oils, which are cheaper but more challenging to process. Deep conversion refineries incorporate complex units such as hydrocrackers, cokers, and resid fluid catalytic crackers (RFCCs), which allow them to achieve higher product yield efficiency and operational flexibility compared to simpler or basic configurations. This transition is also heavily influenced by stricter global environmental regulations, including limits on sulfur content in fuels and reductions in overall refinery emissions. Deep conversion processes are specifically designed to desulfurize, remove impurities, and improve the quality of end products, making them compliant with ultra-low sulfur fuel standards adopted in regions such as Europe, North America, and increasingly, Asia-Pacific and the Middle East. Moreover, the rising demand for clean transportation fuels and petrochemicals in high-growth economies is pushing refiners to invest in advanced configurations that can handle varied crude slates and maximize output of these premium products. The integration of deep conversion technologies also enhances the profitability and competitiveness of refineries by increasing their ability to adapt to fluctuating market dynamics and product demand patterns. Additionally, national oil companies and independent refiners alike are upgrading existing plants or building new deep conversion facilities to ensure long-term viability in a changing energy landscape, where economic resilience, environmental compliance, and product flexibility are crucial.

The Middle East and Africa are growing in the global oil refining industry primarily due to massive investments in refining capacity expansions and the region’s strategic access to abundant crude oil reserves and key global trade routes.

The growth of the Middle East and Africa in the global oil refining industry can be attributed to a strategic mix of natural resource advantage, infrastructure development, and geopolitical positioning. Countries like Saudi Arabia, the United Arab Emirates, Kuwait, and Iraq in the Middle East, along with Nigeria, Egypt, and South Africa in Africa, are channeling substantial investments into upgrading and expanding refining capacities. This investment surge is aimed at capturing more value from crude oil production by exporting refined petroleum products rather than just raw crude. For decades, many countries in these regions exported unrefined oil due to limited refining infrastructure; however, this trend is changing fast as they seek to reduce dependency on foreign refineries and increase economic diversification. The Middle East, with its vast proven oil reserves and high-quality crude, is leveraging this natural wealth by setting up world-scale refineries equipped with advanced technologies. Projects like the Jazan refinery in Saudi Arabia and the Al Zour refinery in Kuwait are examples of state-led initiatives to boost downstream capabilities. Africa, on the other hand, is experiencing growth through a mix of public and private investments. Nigeria’s Dangote Refinery, one of the largest single-train refineries in the world symbolizes the continent’s ambition to transform its oil landscape and reduce reliance on imports of refined fuels, which have historically strained national economies despite oil wealth. Moreover, the Middle East and Africa’s geographic location between Europe and Asia gives them a unique edge in global logistics and petroleum trade. This strategic placement enables quicker, cost-effective distribution of refined products to growing markets in Asia and Africa.

• In May 2025, the government of Mozambique entered into two strategic agreements that, if finalized, would result in the construction of the country’s first crude oil refinery, as well as a grassroots pipeline for the delivery of petroleum-based products from the southeast African coastal republic to neighbouring Zambia.
• In May 2025, Saudi Aramco and TotalEnergies signed a memorandum of understanding to explore potential collaborations in the hydrogen sector. This agreement marks a significant step towards decarbonizing the oil refining industry and highlights the growing importance of hydrogen as a clean energy source (TotalEnergies press release, 2025).
• In April 2025, Valero Energy completed the acquisition of Diamond Shamrock's refining and marketing business for USD 1.1 billion. This strategic move strengthens Valero's market position and expands its refining capacity by approximately 100,000 barrels per day (Valero Energy press release, 2025).
• In March 2025, CNOOC has kicked off a USD 2.74 billion expansion at its Ningbo refinery, boosting its crude processing capacity by 50%. The upgrade introduces a new 120,000 bpd crude unit, elevating the total capacity to 240,000 barrels per day. Additionally, this enhancement will bolster the refinery's production of raw materials for plastics and synthetic fibers.

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