BAKU, Azerbaijan, August 11. Global oil products markets are expected to remain balanced in 2023, as the new refining capacity will increase by 1.6 million barrels per day, Trend reports with the reference to the latest oil market update from the International Energy Agency (IEA).
According to the report, after an increase of 2.6 million barrels per day this year, refinery capacity is projected to increase by another 1.4 million barrels per day to 82.1 million barrels per day in 2023, approaching the 2019 level.
“Global refinery runs have been ramping up seasonally over the past three months and are expected to reach 82 million barrels per day in August, their highest level since January 2020. In the third quarter of 2022, refined product balances are forecast to register the first quarterly build in two years. This was largely the reason behind product cracks and refinery margins falling sharply in July from their all-time highs in June, despite lower crude prices. In July, throughputs rose by 1 million barrels per day month-on-month to 81.4 million barrels per day, and 2.6 million barrels per day above a year ago,” the report said.
As the IEA noted, despite the expected strong quarterly performance in the third quarter of the current year and the possibility of an increase in inventories, production is forecast to decline in September and October due to seasonal maintenance.
“In the fourth quarter of 2022, refined product inventories may start drawing again even as throughputs rise to peak 2022 rates. This is despite our upward revision to Russian refinery throughputs on the assumption that European importers will not refrain from Russian refined product purchases until the end of the phase-out period for sanctions in February 2023,” the report said.
The shift from gas to oil in several product categories, including fuel oil, gas oil, refinery gases and by-products, is expected to increase demand for oil, the agency noted.
“This is partly driven by the refining sector itself. Several European refiners reported they have already started substituting higher priced natural gas in refinery processes, both in energy and hydrogen production, with oil products. The slump in product cracks and refinery margins is thus likely to reverse, even without the additional impact from hurricanes in the US Gulf Coast—provided no further negative developments for demand,” the IEA explained.
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