Emerging aviation sector to boost oil refining demand
The global oil refining market has witnessed tremendous developments over the years. Constant profiling of environmental norms, decline in crude oil prices, and fluctuating natural gas price trends are some of the integral determinants supporting the commercialization potential of the industry.
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A rapid increase in population and an improvement in living standards across emerging nations such as India, China, Brazil, and Argentina is one of the leading factors supporting the market growth. A rise in consumer purchasing power has supported expansion in the urban sector, strengthening the use of refined products.
Another major trend supporting the growth of oil refining market is robust investment in the construction of new oil refineries along with the upgradation of the current ones globally. For instance, in May 2021, Mexico’s state oil company inked a deal to buy Shell Oil’s 50% stake in the Deer Park oil refinery, Texas for USD 600 million.
The industry is replete with many such investments that are expected to improve the business outlook in the coming years. There has been an incandescent increase in the demand for oil from various crucial sectors like aviation, road transport, marine bunker, residential, power generation, rail and domestic, and petrochemical.
Surging need for electricity
Increase in urbanization has led to the need for electricity to support residential, commercial, and industrial activities. With increasing economic developments, there is a rise in the construction of factories, offices, and homes to meet the demands of people. According to the U.S. Energy Information Administration, total energy consumption in the U.S. in 2020 was estimated at 92.94 quadrillion British thermal units.
Increasing energy generation is also supported by government efforts, especially in developing countries, to expand the availability of reliable electricity, boosting demand in the oil refining market.
Key application in the aviation sector
Increase in disposable income among people across the globe has driven expansion of the aviation sector with people traveling for work, leisure, business trips, medical treatment, and education across borders. In the year 2019, nearly 1,034 million people in Europe traveled by air, registering an increase of 3.8% when compared to the numbers in 2018.
The aviation industry is one of the largest consumers of oil as to increasing frequency of air travel being done by people across the globe. However, emission abatement targets could primarily influence the market trend, primarily in the aviation sector.
Saudi Arabia- a hot bed for oil refineries
Over the years, Saudi Arabia has registered an increase in the global demand for petroleum products. The region is witnessing a diversified economic growth along with wide employment opportunities, supporting oil refining businesses.
According to a report by OPEC, Saudi Arabia holds nearly 17% of the world’s petroleum reserves and the oil and gas industry is responsible for nearly 50% of the gross domestic product and 70% of the export earnings. Surging demand to process fuel and heavy crude oil into light distillates will support the regional dependence on oil.
Many leading oil refining companies are aiming at improving their efforts to meet the growing oil demands worldwide. These market players are entering into mergers, acquisitions, and partnerships to increase their geographical presence and to expand their portfolio. Some of the leading industry players include SINOPEC, Shell, PBF Energy, S-Oil, ADNOC, and Saudi Aramco, to name a few.
