Global refinery capacity at its limit without Russia

In this Energy Watch, we argue that the refining stage of the petroleum product supply chain could become a bottleneck in crude oil supply getting through to end users in the coming months. Russia’s seaborne petroleum product exports have roughly halved since the start of the war in Ukraine, meaning the rest of the world’s already-stretched refinery capacity has got more refining to do to keep up with product demand. Assuming Russia’s product exports only partially and slowly recover, unplanned refinery outages will be a bigger than usual downside risk to our crude oil demand and price forecasts. Refinery constraints also imply petroleum product prices will command historically high premiums over crude oil prices for some time.