According to the latest report on the global oil-refining sector by the International Energy Forum and S&P Global, record volumes of refining capacity have been shut down over the past two years, which will lead to tight global fuel markets that is expected to last, at least, through the middle of this decade.
The report says global fuel markets are going to stay tight for years as new capacity takes time to ramp-up. In the medium term, investment in new refining capacity is expected to be muted by forecasts that show global petroleum demand plateauing as electric vehicles replace combustion engines. For Nigeria, which is dependent on importation for refined fuels, the prevailing exchange rate crisis and revenue challenges are putting a strain on fuel prices and operating expenses of many firms.
Going forward, fuel markets are expected to remain tight for years to come as new capacity scheduled to come online will take time to ramp up. More than 2 million bpd in net capacity is scheduled to come online by the end of 2023, but history shows delays and operational challenges could stall progress, the IEF report noted.