The oil refining market is estimated to be valued at USD 1,838.46 Bn in 2024 and is expected to reach USD 2,469.1 Bn by 2031, growing at a compound annual growth rate (CAGR) of 4.3% from 2024 to 2031. As economies continue to develop worldwide, demand for refined oil and petroleum products is growing steadily.

Market Driver - Rising Investment in Oil Refinery Facilities for Upgrading and Expanding

With rising demand for refined petroleum products, oil companies have been making significant investments in upgrading their existing refinery facilities as well as expanding operations. Refiners see the need to revamp facilities with new units like delayed cokers, hydrotreaters, and hydrocrackers that allow for deeper conversion of crude into high-value products like gasoline and diesel.

Apart from regulatory compliance, upgrading refineries also enhances flexibility to process a variety of crude oils and optimize output. This is crucial as oil quality differs widely across regions and the margins change frequently between fuel types depending on market demand and price volatility.

Similarly, Chinese companies are expanding their refining network extensively along with storage and pipeline infrastructure to meet fast growing local petrochemical and bunker fuel needs. Considering these refinery projects usually entail multi-billion-dollar investments with long gestation periods, oil firms are very optimistic about the surety of returns over the next couple of decades given Asia's rising consumption.

Market Driver - Growth in Energy Demand, Particularly in Developing Nations

With increasing industrialization and rising disposable income levels, the demand for energy is growing steadily across developing economies. Developing countries are expected to account for a major share of global increase in oil consumption over the next 20-30 years.

According to projections by the International Energy Agency, non-OECD nations will drive over 90% of the worldwide growth in oil demand by the year 2040. This rapid development offers huge potential to refiners who aim to expand their operations closer to emerging demand centers.

East and South Asia in particular have become hotspots for greenfield refinery megaprojects in recent years. Coastal regions across China, India and Southeast Asia are witnessing explosive urbanization along with mushrooming manufacturing hubs and transportation corridors.

Meanwhile, other places like Africa and the Middle East also require sizeable oil refining capacity additions to serve their domestic petrochemical, power, and mobility needs. With economic growth forecast to remain robust over the long run, such underlying energy demand fundamentals continue bolstering investments in the oil refining market.

Market Challenge - Rise of Biofuels and Electric Vehicles Threatens Oil Refining

One of the major challenges currently faced by the oil refining market is the rise of biofuels and electric vehicles. With growing environmental concerns worldwide about carbon emissions and their role in climate change, many countries are promoting the increased use of biofuels and electric vehicles to reduce dependence on fossil fuels.

Also, advances in battery technology are driving mass adoption of electric vehicles. Many nations have announced plans to phase out or ban petrol and diesel vehicles in the coming years and shift to electric. This poses a serious threat to the oil refining market as demand for gasoline and diesel is likely to fall sharply in the long run.

Oil refinery market may have to retool factories or retrofit plants to process more biofuels or face the risk of assets becoming stranded. Governments incentivizing consumers to switch to green fuels also impacts refining margins. The industry needs to closely monitor these macro trends and devise strategies to mitigate risks to business.

Market Opportunity - Advanced Technologies like Carbon Capture and Storage (CCS) Reducing Emissions

One major opportunity area for the oil refining market is the deployment of advanced low-carbon technologies. Carbon capture and storage (CCS) is one such promising technology that can help reduce greenhouse gas emissions from refineries and petrochemical plants significantly.

CCS involves capturing carbon dioxide from large industrial sources like oil refineries, transporting it via pipelines, and storing it deep underground in rock formations or depleted oil and gas fields. Some refiners have started pilot projects to test CCS technologies.

Oil refiners investing in CCS and other emission reduction solutions can gain a competitive edge in the long run. It also boosts their public image and social license to operate. Technology vendors stand to benefit as CCS deployment ramps up to decarbonize oil refining market and allied sectors.

Integration along the value chain: Many major companies in the oil refining market have adopted an integration strategy, where they control operations across the upstream, midstream, and downstream segments. This provides several benefits - it ensures security of crude supply, optimization of refining and marketing operations, and maximizes profits.

Focus on petrochemicals: With transportation fuel demand plateauing in developed markets, oil refiners are focusing more on petrochemicals to boost margins. Petrochemicals offer higher profits compared to commoditized fuel products. Companies like Reliance Industries in India and Saudi Aramco have made huge recent investments in petrochemical plants.

Development of specialty products: Major players in the oil refining market are investing in upgrading refineries to shift from fuel commodities to more profitable specialty products like lubricants, bitumen and petroleum coke. For example, in 2020, India's Nayara Energy completed a VGO hydrocracker unit that boosted production of valuable motor fuels and specialty components.

Insights, By Product: Growth in Petrochemical Industry Drives Demand for Middle Distillates

In terms of product, middle distillates segment is expected to hold 38.7% share of the oil refining market in 2024, owing to rising demand from petrochemical industry. Middle distillates such as diesel and fuel oil serve as important feedstock and energy source for various petrochemical processes.

Petrochemical manufacturers rely on middle distillates to produce chemicals, plastics, fertilizers and other materials that are essential for construction, automotive and several other manufacturing sectors.

Emerging markets are expected to witness continued strong economic growth and infrastructure investments in the coming years. Their requirement for petrochemicals and associated demand for middle distillates as process fuel is projected to increase further, driving growth of the oil refining market.

Insights, By Fuel: Growing Vehicle Fleet Drives Gasoline Demand

In terms of fuel, gasoline is projected to account for 31.4% share of the oil refining market owing to increasing vehicular traffic worldwide. Gasoline or petrol is the most commonly used fuel for automotive engines powering passenger cars, motorcycles, scooters and other light vehicles.

Additionally, gasoline finds application as a blend component in gasohol formulations which are being adopted as a renewable transportation fuel in certain regions. Continued investments in road infrastructure and changing lifestyles supporting increased personal motorization are expected to keep demand for gasoline robust in the coming years. This will drive important trends in the oil refining market.

Insights, By Application: Marine Bunker Fuels Dominate Oil Refining Applications

In terms of application, marine bunker contributes the highest share of the oil refining market in 2024, owing to the globally integrated nature of sea trade. About 90% of world trade is carried by sea and marine vessels require heavy fuel oil or other bunker fuels in large volumes to power their engines over long distances.

As international commerce and outsourcing of manufacturing continues to intensify, the maritime industry will likely register steady demand growth for bunker fuels.

In addition, stricter emission norms are also prompting ship owners to explore cleaner but energy-dense fuel alternatives to comply with growing maritime regulations. This will continue to influence major trends in the oil refining market.

• Capacity Utilization Rates: Global refinery capacity utilization stood at around 80.5% in 2023, indicating some excess capacity due to fluctuating demand patterns.
• Asia Pacific held the largest share of the oil refining market in 2023, accounting for 37% of global revenue. North America’s oil refining market includes 149 active refineries, led by Marathon Petroleum Corporation.
• Integration of Digital Technologies: Refineries are increasingly adopting digital tools like AI and IoT for predictive maintenance, optimizing operations, and reducing downtime.
• Emergence of Modular Refineries: To cater to remote areas and reduce initial capital expenditure, companies are investing in smaller, modular refineries that can be scaled as needed.
• Focus on Petrochemicals: Many companies in the oil refining market are diversifying into petrochemical production to offset the slowing demand for traditional fuels due to the rise of electric vehicles.

The major players operating in the oil refining market include Reliance Industries Limited, BP PLC, China National Petroleum Corporation (CNPC), ExxonMobil Corporation, Chevron Corporation, PJSC LUKOIL COMPANY, Petroleos De Venezuela, Hindustan Petroleum Corporation Limited, Chevron Corporation, Marathon Petroleum Corporation, Indian Oil Corporation Limited, and Royal Dutch Shell Plc.

• Capacity Utilization Rates: Global refinery capacity utilization stood at around 80.5% in 2023, indicating some excess capacity due to fluctuating demand patterns.
• Asia Pacific held the largest share of the oil refining market in 2023, accounting for 37% of global revenue. North America’s oil refining market includes 149 active refineries, led by Marathon Petroleum Corporation.
• Integration of Digital Technologies: Refineries are increasingly adopting digital tools like AI and IoT for predictive maintenance, optimizing operations, and reducing downtime.
• Emergence of Modular Refineries: To cater to remote areas and reduce initial capital expenditure, companies are investing in smaller, modular refineries that can be scaled as needed.
• Focus on Petrochemicals: Many companies in the oil refining market are diversifying into petrochemical production to offset the slowing demand for traditional fuels due to the rise of electric vehicles.

• By Product
  • Middle Distillates
  • Light Distillates
  • Fuel Oil
  • Others
• By Fuel
  • Gasoline
  • Kerosine
  • Liquified Petroleum Gas (LPG)
  • Gasoil
  • Others
• By Application
  • Marine Bunker
  • Transportation
  • Aviation
  • Petrochemical
  • Agriculture
  • Electricity
  • Residential & Commercial
  • Rail & Domestic Waterways
  • Others
• By Complexity
  • Hydro-skimming
  • Topping
  • Conversion
  • Deep Conversion