Net global CDU capacity additions (kb/d)
Global composite re ning margin, monthly
800
12 20 18 16 14
0.25 million b/d
0.92 million b/d
0.35 million b/d
600
Asia Russia & Caspian
Middle East
Europe
North America
Africa
400
10
200
2 4 6 8
0
-200
5 yr range
5 yr av.
2025
2026
0
- 4 00
Q1 Q2
Q 3
Q4 Q1 Q2
Q 3 Q4 Q1 Q2
Q 3 Q4
2025
2026
2027
Figure 2 Net global CDU capacity additions (kb/d) and global composite gross refining margin ($/bbl). Source: Wood Mackenzie Product Markets Service Short Term
As shown in Figure 1, non-OPEC supply growth is set to outpace global oil demand again in 2026 (as it did in 2025, driving the price of Dated Brent from a monthly average price of just under $80/bbl in January 2025 to the low $60s/ bbl in December). The supply growth is primarily from conventional projects in Latin America, led by Brazil and Guyana. It is therefore dependent upon the timing of project completion rather than the prevailing oil price. US tight oil production, however, is responsive to price, with modest production declines recorded during late 2025 and projected for 2026. However, US Gulf of Mexico projects and growth in Canada outweigh US tight oil declines, sustaining production growth in North America. The implication of this supply overhang is that oil prices are likely to weaken further in 2026. Q1 2026 is projected to be the low point at mid- to-high $50s/bbl for Dated Brent, with prices then recovering as refinery runs increase to satisfy Northern Hemisphere seasonal demand growth. In 2027, non-OPEC supply growth is outpaced by global oil demand growth, but declining US Lower 48 production supports a modest price recovery. 2026 is the floor for refining margins, with chemicals to remain in the doldrums The commercial performance of the refining sector is complex, given the product-specific demand dynamics, supply/demand balances, and trade flows. However, at the highest level, global refinery utilisation trends provide an
indication as to the aggregate performance of the refining sector. As shown in Figure 2 , net global crude distillation unit (CDU) capacity additions for 2026 are forecast at almost 1 million b/d, due to projects in Asia and the Middle East achieving commercial production, outweighing closures in Europe and the US. This indicates that net capacity additions outpace global demand growth. However, with 2026 demand growth dominated by petrochemical feedstocks, the tightness around the refining system will certainly ease unless there are unforeseen significant capacity outages. Transport fuel inventories are expected to build, particularly during Q1 2026 when oil prices are projected to weaken, enabling refiners to run harder than seasonal norms. The ramp-up of the new projects in the Middle East and India during Q1 2026 along with the return of the Dangote facility in Nigeria to normal operations after maintenance, normalises refining margins through 2026. We project 2026 to be the margin low point for the global refining industry, as there are limited capacity additions in 2027, while oil demand continues to rise. Rising global oil demand with limited capacity additions supports higher refinery utilisations, sustaining global refining margins at healthy levels until global oil demand peaks and starts to slowly decline in the early 2030s. The outlook for chemicals remains challenging. China continues its wave of capacity additions, which far outpace global demand growth, as several refineries transition from oil products
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