Refinery Closures in 2025 to Tighten Global Diesel Supply and Support Prices

Preview

The closure of oil refineries is expected to play a significant role in supporting global diesel prices in 2025. This trend is driven by several factors:

Refinery Closures: There are plans for significant refinery closures, such as the Phillips 66 refinery in Los Angeles, which is set to shut down in the fourth quarter of 2025. This closure alone will remove 139,000 barrels per day of production capacity from the market. The cumulative effect of such closures is expected to tighten the supply of diesel, creating upward pressure on prices.

Preview

Demand Dynamics: While global demand for road transportation fuels, including diesel, is projected to increase by only 1% between 2024 and 2034, specific regions like the East of Suez are expected to see a substantial rise in diesel demand. This regional demand increase could exacerbate the supply constraints created by refinery closures.
Market Resilience: Despite economic challenges, the diesel market has shown resilience, with stable price trends observed in the U.S., for instance. This stability suggests that while prices may not skyrocket, they are likely to remain firm due to the reduced supply capacity.
Economic Factors: The transition to cleaner energy sources and advancements in fuel efficiency are also influencing the diesel market. These changes are expected to moderate the overall demand growth but will not fully offset the supply reductions from refinery closures.

In summary, the closure of oil refineries in 2025 is anticipated to reduce the global supply of diesel, creating a tighter supply-demand balance. This tightening is expected to support higher diesel prices, even as global demand growth remains relatively modest.

Refinery Closures in 2025 to Tighten Global Diesel Supply and Support Prices

Preview

The closure of oil refineries is expected to play a significant role in supporting global diesel prices in 2025. This trend is driven by several factors:

Refinery Closures: There are plans for significant refinery closures, such as the Phillips 66 refinery in Los Angeles, which is set to shut down in the fourth quarter of 2025. This closure alone will remove 139,000 barrels per day of production capacity from the market. The cumulative effect of such closures is expected to tighten the supply of diesel, creating upward pressure on prices.

Preview

Demand Dynamics: While global demand for road transportation fuels, including diesel, is projected to increase by only 1% between 2024 and 2034, specific regions like the East of Suez are expected to see a substantial rise in diesel demand. This regional demand increase could exacerbate the supply constraints created by refinery closures.
Market Resilience: Despite economic challenges, the diesel market has shown resilience, with stable price trends observed in the U.S., for instance. This stability suggests that while prices may not skyrocket, they are likely to remain firm due to the reduced supply capacity.
Economic Factors: The transition to cleaner energy sources and advancements in fuel efficiency are also influencing the diesel market. These changes are expected to moderate the overall demand growth but will not fully offset the supply reductions from refinery closures.