Global fuel markets are set to remain tight until at least the middle of next year as the second quarter of 2027 will see unusually high planned maintenance that refiners have deferred from this year, Morgan Stanley analysts say.
Planned maintenance at refineries worldwide is set to peak at 3.4 million barrels per day (bpd) in the second quarter of 2027, as many facilities will be overdue for maintenance after currently running at maximum capacity utilization. In recent months, many refiners have postponed scheduled outages to keep fuels flowing in a tight market with record-high refining margins.
The expected drop in refinery utilization in the second quarter of next year would be two and a half times the usual capacity taken offline by spring maintenance globally, and is more than the capacity in the Middle East and Russia that’s currently offline, Morgan Stanley’s analysts said in a note carried by Bloomberg.
Refinery maintenance “cannot be delayed indefinitely,” the Wall Street bank’s strategists noted.
The second quarter of next year “already looked like a quarter with a lot of maintenance outages, but this has grown further over time,” they said.
The current crunch in the diesel and gasoil markets is set to extend into the middle of next year, the International Energy Agency (IEA) said in its monthly Oil Market Report published last week.
“Falling inventories, soaring cracks, and steepening levels of backwardation have signalled the need for additional supplies,” the IEA said.
Even if refinery throughput recovers rapidly into the end of this year, gasoil supply will fall short of meeting demand this quarter, “suggesting that the replenishment of lost inventories, outside of typical seasonal fluctuations, is unlikely before 2H27,” the agency said in its report.
Global diesel prices have eased from the all-time highs of more than $200 a barrel reached in September, but diesel benchmarks remain nearly double the price of crude oil and their pre-crisis levels, the IEA said.
By Tsvetana Paraskova for Oilprice.com
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