The Gasoline Glut - Markets Out of Balance

Emma: Hello, everyone, and welcome to our podcast miniseries that shines a light on the refined products market. This series is part of a new, exciting addition to Argus Consulting Service Offering, the Argus Refined Products Outlook. With this expansion, we can now provide focused, dedicated insights across both crude oil and refined products, making it easier for you to quickly find the information that matters most.

In today's episode, we're diving into the global gasoline market. And by the way, this is our second episode. So, if you haven't listened to our first one on the diesel market, definitely go back and give it a listen. My name is Emma, and I'm an analyst in the Crude and Refined Products team, and today I'm your host.

In this series, we're kicking off the month with a deep dive into how global gasoline markets evolved in 2025, including the surprising late-year strength that caught many off guard. How EV adoption and shifting policies, including blending mandates, a restructuring demand, especially in the world's biggest consuming regions. The impact of new mega refineries coming online and how these capacities disrupted traditional trade routes. And finally, the major drivers to watch as we head into 2026, from supply risks to policy change.

With me today are two of my colleagues, George Maher-Bonnet, Deputy Editor, and Asill Bardh, Senior Editor. George, let's start with you. Looking back at 2025, how would you define the year for gasoline, particularly as the market saw some unseasonable strength towards the end of the year?

George: Hi. Thanks, Emma. Yes. So, the gasoline market very much kind of ended up being determined by Nigerian fundamentals, which is somewhat unsurprising, given how much airtime the country gets when it comes to the kind of destiny of the gasoline market, especially in the Atlantic basin. It didn't really begin this way. However, I think it was a much more modest start.

So, I suppose in the first six months of 2025, non-oxy cracks, so, you know, the profitability for refining gasoline was comfortably below year-ago levels, okay. In the first half, independently held gasoline stocks at the ARA hub in northwest Europe were considerably higher on the year. And Nigerian gasoline imports, which are very much a bellwether of demand in a key importing region, West Africa, they were very much on the decline as Dangote, the independently-held mega refinery of a nameplate capacity, totaling 650,000 barrels, saw its gasoline production continue to ramp up over the first half of 2025.

However, around about the summertime, when we experienced peak summer consumption across the northern hemisphere, that's both the U.S. and in Europe, gasoline stocks at the key trading export hub of Amsterdam, Rosser Mantswerk, began to converge towards year-ago levels. And around about then, we also heard the first kind of reports of maintenance works at the Dangote refinery, in particular, at its gasoline-yielding RFCC units around August, September time, which had, of course, proven instrumental in weaning the country off of European gasoline over the first half of last year.

So, we saw that Nigerian gasoline imports began to ramp up in October after the RFCC was brought back online. So that was kind of an interesting inflection point. To that as well, we saw a kind of spike in auxiliary demand around October, November, which was triggered by, I suppose, concern mounting amongst Nigerian importers over an imminent introduction of import tariffs on gasoline and diesel. This would have totaled a 15% charge on the value of gasoline imports. This was when we saw non-oxy cracks hit a very unseasonable 26-month high of $28.50 a barrel against front month ice Brent futures by mid-November.

But as we approach the peak seasonal Nigerian demand season in December, cracks came off as the Dangote refinery very much slashed gasoline prices and made foreign barrels, especially those from Europe, uncompetitive. And as we know, non-oxy refining margins precipitously fell off in the aftermath of that commercial decision at Dangote. So, as I say, Emma, it was very much, it turned out to be quite a Nigeria-centric year, I suppose, for gasoline market, at least by the end of it. And in a very explicit way. Yes.

Emma: Thanks, George. As you said, Dangote has definitely been a key theme, and I think it will continue to be a key theme, particularly for Europe in the coming year. But first, shifting east of Suez, Asill, for you, what stood out in Asia last year? What were the defining demand and supply themes across the region that you saw?

Asill: Hi, Emma. Yeah. So, I think last year was a particularly interesting one for the Asian gasoline market, especially, I think, in the second half of the year. So, I think first half, particularly the first quarter, you know, was characterized by ample supplies market was in a contango. I think it's the usual first quarter weakness we see with Korean, Japanese, Middle East refining runs, generally quite supportive, supported by good gas oil margins.

So, I think gasoline production was, you know, on the spillover side, you know, supply to quite high. Then I think the second half was when we really started to see a little bit of a supply squeeze emerge. We saw Asian gasoline cracks climbing to around two-to-three-year highs. So even earlier in the year, I think refining margins were still relatively healthy. So taken as a whole, 2025, I think ended up being a very good year for gasoline-refining margins.

So, a lot of this tightness, I think we saw in the second half, which started to build up was a little bit, I think, driven. The narrative was driven by what was happening in the west of Suez. So, I think we saw structural refinery closures continue in Europe alongside, I think, a lot of supply uncertainty materializing driven by, I think, the sanctions on Rosneft and Lug Oil that came up over the last year. I think on top of that, arguably, was the peak of refinery disruptions last year, driven by, I think, conflict-related damage on Russian refinery infrastructure. And that temporarily took a meaningful amount of capacity offline.

I think that mattered for Asia, in particular, because, you know, a feasible portion of Russian NAFTA does flow eastwards and is used for gasoline blending. And I think on the whole, a good part of all the sanction-related news added a lot of risk premium to the markets, and that uncertainty caused a lot of chaos and confusion. So last year was one where markets east and west of Suez remained unusually interconnected. Arbitrage flows through the Middle East helped to transmit some tightness across the regions, tightening balances, I think not just in Europe, but also in Asia as well.

And I think on the Asia side, particularly Indonesia, which is the region's largest gasoline buyer by far, was quite a wildcard last year. So, in early May, I think they came up to announce the country's ministry that it would halt gasoline imports from Singapore and instead source directly from producers in the Middle East and the U.S. So that, you know, created a lot of ruckus in the market. And I think that this potential shift in trade flows appeared to be linked to no negotiations with Washington over trade tariffs. And I think there was some ongoing domestic investigations into alleged irregularities in oil product imports. Although, of course, none of this was officially verified, but I think that was just, you know, the market chatter on what was happening on Indonesia.

So, this also led to a few private import players in Indonesia that faced difficulties in getting import quotas from the government. So, I think a good part of the fourth quarter of last year, a lot of these private fuel players faced a lot of fuel shortages, you know, at the pump in Jakarta, and I think in the central part of the city.

So, from a demand perspective, I think this uncertainty really disrupted, you know, the procurement planning, the securing of term volumes on Indonesia's side. And I think that was a big reason why, eventually, at the end of the year, we saw a sharp spike in spot buying by Pertamina, which is the state-owned refiner in Indonesia. And that, unfortunately, coincided in a very tight supply environment in the Asian gasoline complex when we saw, I think, a very unusual amount of secondary units going offline around the same period.

So, for example, just in Taiwan itself, we saw both the refiners, CBC and Formosa taking their units offline. In South Korea as well, I think, you know, there was this rumor, like, word going around that it was an FCT virus or something spreading in the Asian gasoline scene. But yeah, I think on the whole, that was how I would summarize what was happening in the Asian side of things.

Emma: Thanks, Asill. And I think this is a good point to look forward a little bit, particularly in the Asia Pacific region. Something you didn't mention that much, but is EV penetration, which is really a key driver of what will be the structural decline in gasoline in kind of the global market. China is really leading the way in terms of EV adoption in both the Asia Pacific region and the wider world.

In 2025, we saw the electric vehicles made up more than 30% of sales in China, with around 20% being plug-in hybrids separately to that, making more than 50% in some months being sales of new energy vehicles rather than gasoline, which has typically been the most common vehicle in the vehicle fleet. This is really driving the structural decline of gasoline demand in the country, a trend we definitely expect to see continuing.

The low cost of electricity is one of the key drivers of uptake of EVs in China, as well as the lower cost of vehicles, making them more accessible than they commonly are west of Suez, and more people can afford them. As I mentioned, electricity is very low, and this means we're even seeing that plug-in hybrids are commonly being run as EVs rather than using gasoline, further weighing on gasoline demand.

In the wider Asia Pacific region, EV penetration isn't quite as strong as the high levels we're seeing in China, but we're definitely seeing it rising. Interestingly enough, not always led by the car fleet. Quite often, it can be led by the two-wheeler fleet, which is definitely a divergence in the trends that we see compared to when we look at Europe. But for the moment, we do see firm growth in gasoline demand in Asia Pacific, which is largely driven by firm demand in India, where good economic growth and a growing population mean that the expanding vehicle fleet is outpacing any vehicle efficiency gains or EV penetration.

The other thing we definitely have to keep an eye on is ethanol blending mandates. Indonesia, which Asill mentioned earlier, is the biggest buyer of gasoline in the Asia Pacific region, has talked about introducing an E10 blending mandate, which would reduce the country's reliance on imports and could have a meaningful impact on trade flows.

Nothing has been announced and they also have historically struggled to raise their ethanol blending, so there is some skepticism of whether this is achievable, particularly as they could have issues with ethanol supply, but it's definitely something to keep an eye on. Just also touching on Europe, again, expecting to start to see gasoline demand decline in 2026, and we're already seeing demand structurally falling in the U.S., with a year-on-year drop in gasoline demand in 2025.

Although EV adoption is a driver of this, the key driver is rising vehicle efficiency, as particularly in the U.S., EV penetration remains relatively weak, but vehicle miles are growing year-on-year. Something just worth keeping an eye on is that the sentiment towards policy supporting the uptake of EVs is changing quite a lot.

So, in the U.S., we've recently seen the removal of the tax subsidy for EV purchases in September, and looking at vehicle sales, there was a meaningful drop in the sales of EVs in the final quarter of the year after this change happened with penetration dropping to around 10%. But even if we do continue to see EV sales staying at this lower level around 10%, we will still see, or we do still expect to see gasoline demand falling in the U.S., both in 2026 and 2027, driven by improving vehicle efficiency, as I mentioned earlier.

So, having talked about the structural demand and the changes in demand, it's now a good time to swap over to thinking about supply. And when we're considering supply, it's impossible to ignore the probably the most significant development in the Atlantic basin, the commissioning and ramp-up of Nigeria's Dangote Refinery, which George has already mentioned. But George, can you walk us through how Dangote is changing the supply landscape, both for West Africa and the global gasoline market?

George: Yes. Certainly, Emma. I mean, Dangote has certainly proven incredibly disruptive, no less so for the traditional European flow of gasoline into the West Africa region. West Africa itself essentially accounted for around one in five barrels shifted out of Europe for foreign buyers up until recent times. West Africa itself is simply taking less gasoline now from the continent and it's single-handedly down to Nigeria's independently-held Dangote Refinery. There we've seen consistent ramp-up of gasoline production.

The refinery itself is incredibly, ideally geared towards the yield of gasoline for a country whose road fuel mix is weighted incredibly heavily towards gasoline. It's around 90%. The country not only runs on gasoline for its vehicle fleet, its kind of passenger fleet, but also off-grid power generation, so-called bucket generators for domestic purposes are powered themselves off of gasoline. It's an incredibly key fuel type down there.

So, what's been interesting is that, as I say, not only has Europe found less of a market for the product, but even Dangote itself, as disruptive as it has been, has been able to exploit workable arbitrages to even book cargoes for the U.S. last year. So that is, let's say how it is, a net importing gasoline nation finding opportunities itself to export the product it often can't seem to get its hand on to another net gasoline importing nation.

It's quite remarkable. And when we saw it, it was a bit of an illustration of how disruptive Dangote has been, not just in the kind of eastern part of the Atlantic basin, but you can now see how global an impact Dangote is becoming, I suppose, in its success. If we have a look at the key numbers, I suppose, when it comes to the flows, Nigeria took just 130,000 barrels per day of gasoline from Europe last year. That's down from a peak of 340,000 barrels per day in 2022.

So the refinery certainly expedited this downward trend, which began with the unwinding of the state-backed gasoline subsidy in 2023 when President Tinubu was elected. What's interesting for us here in Europe is that we as a continent have not proven particularly effective at rerouting these cargoes to alternative destinations.

Sources are telling us, and it's becoming quite an oft-heard refrain, but European refineries may be coming under pressure if they continue to have a historically large exposure to WAF-oriented gasoline exports and aren't doing anything to address this. So, with these reroutings in mind, it's interesting to hear that Phillips 66, which owns the Humber Refinery in the east of England, is carrying out a gasoline quality improvement project to lead to higher quality gasoline production from Q2 2027.

So, it's interesting to hear how some refineries in Europe are proactively seeking to rewire, reconfigure the way their refineries work to better adapt to alternative export markets now in light of these developments in Nigeria. It's particularly interesting to hear how with P66 gasoline exports from its Immingham terminal to West Africa hit around 30,000 barrels per day last year, whereas, they only shipped out 8,000 barrels per day for the Americas. Of course, this does, again, once again, prove how certain refineries in Europe ought to be considering the implications of Dangote. And in order to secure their financial future, of course, this is very salient.

Emma: And now bring the conversation back to the east. Asill, on the supply side, what has changed in Asia? What is the latest on the new refining capacities? And are we seeing such kind of significant changes to trade flows that have historically been quite consistent?

Asill: So, I think as very well mentioned by George, you know, I think Dangote is leading the narrative on the west for gasoline supply side. On the east, perhaps, I think we have to look at the role of China, India, and the Middle East moving forward. So, taking the narrative back to China. I think one thing we can say, probably with some confidence moving forward, is that China's total refined product export quotas are unlikely to increase meaningfully from here.

So, they seem to have settled at a fairly steady level at around 41 million barrels for the year for all, I think gasoline, gas oil, and jet combined. So, this gives us a useful and meaningful framework to think about Chinese exports. While monthly export volumes remain very highly sensitive to export margins over the course of the year moving forward, we can roughly track how much quota has been used and how much remains.

So, as we move further into the year, month by month, that should give us a clearer signal on how aggressively China may need to ration its remaining quotas, which, in turn, I think also limits how much gasoline supply can come out of the country. So that said, any decline in Chinese gasoline exports is likely going to be offset by supply elsewhere. So, where are we seeing this? I think India, in particular, is one of these countries up and coming.

So, in India, we are seeing a bit of a new capacity additions coming online. You know, we have the Rajasthan Refinery, as well as expansions at NRL and Panipat. So increased ethanol blending in the country as well, moving forward, I think they are going to target E20. So that should, I think, free up some incremental gasoline barrels for export, which these volumes should eventually flow some of it eastward. And, of course, some of it will fill in the shots in perhaps Eastern Africa, etc.

But on the whole, I think we've already seen this year a bit more incremental supplies coming out of India, which is just a reflection of growing supply. Of course, something to note for India, demand is consistently due to outpace supply. I think we will see that period where, you know, demand is going to play catch-up for a while as the region gets a bit longer in length on the supply side. And I think just to look at the Middle East as well, we're seeing a little bit more supply grow from that region as well.

So, capacity additions in Iraq, Iran should gradually translate into higher product availability. In fact, we're already starting to see signs of lengthening supply this year. You know, Iraq is almost reducing their import demand. And on top of that, we are seeing more gasoline flowing out of countries such as, Kuwait is one of them. I think this year, already as well in just the last one month or so, they've already exported about two cargoes. And if we look at import demand from SOMO, they have mentioned that they are moving away from term tenders just because they are getting more self-sufficient and reliant on their own domestic production. So, they will only turn to the spot market for periodic buying.

I think on just the refinery run side, you know, runs are expected to remain relatively robust this year, especially if crude prices, you know, are staying a bit on the lower side, the return of your Venezuela crude barrels hitting the market should ideally depress heavy crude prices. So, this environment should, I think, support more healthy refining runs, especially in your crude exporting countries in the Middle East, particularly for Saudi Arabia.

So, I think if we look at refining margins, gas oil is performing extremely well. So, I think this environment is going to be quite supportive of generally good refining margins, should underpin high refinery utilisation across the Middle East region. And, of course, the big development everyone in Asia is watching for is the commissioning of Pertamina's Balikpapan 90 kb/d RFCC unit. So, it's currently expected to gear up towards meaningful production towards the end of the first quarter of this year.

Although, realistically, just to keep in mind, you know, the RFCC is a very complex unit to start up, and it's not the easiest to gear up. You know, we have seen troubles, and I think Dangote is one example. In Malaysia, we have the Pengerang RFCC units, you know, so not an easy unit. So even though technically it's going to be up and coming, we expect it to take a while before, you know, they sort out all the technical difficulties, etc., before they begin to ramp up. But I think even then, you know, once it ramp up, it will displace around 45 kb/d per day of imports Indonesia. So that should, you know, add a bit of length to Asian gasoline balances. So, on the whole, I think not a very optimistic picture so far, as no length builds across different parts of the Asia Pacific region.

Emma: Thanks, Asill. As you said, rising supply in 2026 is going to continue to be a theme and really changing trade flows from what we have historically seen. Something we haven't mentioned really so far is the Dos Bocas Refinery in Mexico, which is another mega refinery that has taken its time, I'd say, to ramp up and start producing gasoline. But we are starting to see significant volumes being produced at a relatively consistent level there. And this is something that's likely to rise more in the coming year. And Mexico is another country which is traditionally an importer, a key importer of gasoline.

So, we are definitely seeing a number of places which have historically been importers raising their gasoline supply, which will reduce their reliance on imports. I think it's really Europe where we're seeing the biggest impact on this, a region which is structurally long in gasoline and seems to be losing its typical markets for where this gasoline would go and not doing a great job of finding alternative buyers. This does, I guess, leave the risk that we will see further refinery rationalizations, something we've already seen a bit.

And although, as George did mention, some refineries are looking at ways to kind of upgrade and produce more gasoline that's more competitive. But quite a lot of the refineries in Europe are older and more simple, making them more vulnerable to cost pressures if we do see gasoline cracks fall with this longer market that we are expecting.

But this kind of leads us quite nicely into thinking about trade flow dynamics and the changes that we have already seen and what we may see. So, George, how are you really seeing these traditional routes changing in Europe? This is something we've kind of touched on and mentioned a few times, but now feels a good time to dig into it a bit more.

George: Yeah. Absolutely, Emma. So, what's been mentioned already, I suppose, is how that particular flow from Europe to West Africa is significantly under pressure. Another which you've alluded to as well as a result of the hype up and the expectation towards the Olmeca Refinery, is the traditional European U.S. flow of gasoline as well.

Here, this is unequivocally the most important flow for European traders of gasoline. The U.S. accounts for, and most notably, the U.S. Atlantic coast, accounts for, again, around about one in five barrels of gasoline loaded for export from the continent. And here, we've seen even before the ramp up of Olmeca, a significant weakening in the flow from Europe to the U.S.

There are, I suppose, several things to bear in mind here. One is, as we hear from sources, an increasingly more workable arbitrage from U.S. Gulf coast refiners to the U.S. Atlantic coast via the Colonial Pipeline. So in the U.S., where the Jones Act essentially makes internal shipping of products from one U.S. port to another more expensive, the Colonial Pipeline provides a more cost-effective alternative for this transfer of goods from one region to the other. And this internal arbitrage has essentially weighed on loading of European gasoline cargoes to the U.S. and is most likely to continue.

What's also interesting as a method by which one can get around the more costly Jones Act and the requirement for U.S.-built vessels to be operating the internal flow of product from one U.S. port to another is increasingly, we see, the export of gasoline cargos from U.S. Gulf coast refiners to destinations and tank farms in the Caribbean, most notably the Bahamas for what seems to be then onward shipment to ports along the East Coast of the U.S.

So here, over the years, we've seen a ramp up to from around 20 to 30,000 barrels per day, i.e., U.S. Gulf coast to the Bahamas and to around about 60 to 70,000 barrels per day by last year. Of course, none of this gasoline is being consumed in any great volume in the Bahamas, an incredibly small market for the product when it comes to consumption. But instead, we are seeing an onward shipment from particular tank farms and the Bahamas to the U.S. Atlantic coast.

So, this is another flow which seems to be eating into what would otherwise been traditional European market share. So, it's an interesting development we're seeing within internal U.S. gasoline trading dynamics there, and Olmeca hasn't really begun to impact the U.S. gasoline market yet. I suppose, insofar as the Olmeca refinery is producing more gasoline for domestic Mexican consumption, this could imply that there are lower volumes of gasoline now being loaded from U.S. Gulf coast refineries for the Mexican market.

Again, this would logically lead to the conclusion that there is greater volume of gasoline sloshing around in inventories across the southern United States. Again, where would this product go? More likely than not, in a kind of shrinking pool of export markets for the U.S., it would be kept at home, would be our assumption.

So, it seems as though, as you've kind of alluded to there, Emma, more gasoline is being kept within the western hemisphere as it's being produced, which is, of course, supporting the availability of the product, and, of course, weighing, therefore, on the demand for foreign barrels to bridge what would otherwise have been a supply shortfall. So, it's something that we're certainly keeping our eye on.

Emma: Thanks, George. That's really interesting to hear. Let's swap again back to Asia. Asill, are you seeing similar changes in the trade flows in the Asia Pacific region? We've obviously talked about Indonesia changing, going straight to producers rather than importing from Singapore, but are we seeing any other structural or significant changes?

Asill: So I think, yes, in terms of trade flows, I think what we are seeing this year, in particular, as a reflection of what happened last year, is the global gasoline market is becoming increasingly interconnected. I think this is driven, I know it's what yourself and George mentioned about all these mega refining capacities like Dangote and Dos Bocas that is coming online. And so, this is likely to open up much more interesting arbitrage opportunities available.

So, we've already seen hints of this in tighter market conditions last year. So, for example, in the Dangote gasoline moved out of West Africa into the Middle East, it fulfilled a shot in the U.S. East Coast. And also, I think it even came so far out into Asia. So, this was, I think, the first time we saw this sort of Dangote's role as a global swing supplier.

Looking ahead, I think the commissioning of Dos Bocas and the ramping up of its capacity, once again, should reduce the flows of Pemex on them pulling supplies from Asia. So again, keeping Asia relatively longer in length. And then I think if we look at the Middle East as well, with more refining capacity coming online, even in India, so it wouldn't be too surprising to see more barrels fulfilling, I think, arbitrage opportunities, whether it's in East and Singapore, even I think as far out as Europe.

So, in fact, we've already, I think, started to see this early in the year, I think, a notable increase in cargoes heading to Singapore, particularly from Saudi Arabia. And just, yeah, another thing to note on the West Coast side of things, you know, with the recent closures of P66 refinery last year, and I think this year, Belarus refineries just begun shut down operations. So that should, you know, keep that region more import reliant. And I think where it's going to get its supplies from will definitely be, you know, pulling from Asia itself. So, I think, yeah, that's the picture on Asia side of things.

George: And it's interesting, Asill, because just to interject here, there is no doubt that no, suppose it's support for a pull on European gasoline barrels as those West Coast refineries close. It's not of any...it does not appear to be supportive for that flow, which is very interesting, despite a reduction in U.S. capacity. And in light of everything that has just been said, it does seem as though it's very much a kind of a short for East Asia to plug instead of Europe. Yes. So, it's of no respite for European refiners, unfortunately.

Asill: Oh, yeah, very fair. On the West Coast, also, I think the spec is extremely difficult to meet, particularly, I think, carbide gasoline. So, I think if we see, you know, most of these capacity additions and mega refining, like the more complex refineries, are now shifting towards Asia, I think that makes a lot of sense. Yeah. Why? I think Asia, like East Asia, will fill the shot. And, you know, unfortunately, on the Europe side of things, perhaps they may not have the capacity to meet the spec. Yeah.

George: Exactly. So even spec aside, right, so we have RBOB being the kind of the New York Harbor standard, where we're mostly landing a lot of our U.S.-bound cargos, we also have to take into consideration the freight economics of the situation, right? And to add freight fees to cross the Panama Canal, you can see how quickly this is a very uncompetitive arbitrage to work for European refiners.

Having said that, we did see a couple of cargoes shipped from the UK, I believe it was the Valeros Pembroke Refinery, which landed on the US West Coast last year, kind of at the peak of refinery maintenance, both planned and unplanned, and the El Secundo fire, I believe as well, in Los Angeles. So, it's not to say that this ARP could not materialize, but it appears as though the conditions would have to be exceptional for it to be workable. Yeah.

Emma: That's really good to hear and really interesting to hear. And it seems that, or we kind of all know that it doesn't seem that unlikely that further refinery rationalization, either in the U.S. or in Europe is relatively likely the question kind of remains, which refineries would it be? And that's quite hard to predict. But I think we've used quite a lot of time now.

So, it's a good time to wrap up our podcast with a bit of a near-term watch list of what we should be tracking, both in the next couple of months and throughout the rest of the year. As we said, and talked about quite extensively, the rising supplies, particularly in the Atlantic basin, definitely something we need to watch throughout the year. There's been quite a lot of questions of Dos Bocas as well, managed to keep raising runs. Obviously, Dangote is having maintenance on the RFCC right now. They've had quite a lot of issues, which George alluded to throughout the year, which did add quite a lot of volatility to prices.

So, the question remains of, can they have more stable runs this year, which would remove some of the volatility from the market? But I think any issues at any of those upcoming refineries could really give a couple of price spikes throughout the year, even as the underlying fundamentals aren't wildly tight. Similarly, for Balikpapan in the Asia Pacific region, the big question remains, when will they be able to get it up and running at a consistent and relatively high level that it does impact the supply of gasoline in Indonesia?

As Asill mentioned, the RFCCs are generally quite tricky to get running. The other thing worth keeping an eye on is extreme heat waves. We didn't see that much last year, but in previous years, we've seen that extreme heat waves really weighing on refinery runs and limiting the runs possible in the Southern Europe. And that tends to happen at a time of peak demand over the summer driving season. So, it's definitely worth keeping an eye on that.

And then, swapping to the demand side, in the very short term, we are expecting to see a boost to demand, particularly in the Asia Pacific region from Lunar New Year and Ramadan celebrations. In the longer term, the thing we really need to keep an eye on across the whole market is the EV trends and changing policy for ethanol blending.

As I mentioned and Asill mentioned, there's talk of ethanol blending mandates rising in a couple of countries, so in India and Indonesia, although nothing is firm on those ones yet. EV sales do seem to be rising, but particularly west of Suez, we have seen changing sentiment towards policy. And so that could mean that we see more of a divergence between trends, both east and west of Suez. But I think it really is going to be China still leading the way here in terms of EV penetration.

But Chinese vehicles, such as BYD vehicles, moving into western markets could lower the cost of EV vehicles, which while policy is reducing incentives for purchases, the lower cost of vehicles themselves could drive up purchases. So that's definitely something to keep an eye on. But that's it for today's episode.

Thank you for listening. And if you're enjoying this series so far, stick around, and we will be recording our third episode soon. You can also find more information in our new Refined Products Outlook service. For those of you who would like access, don't hesitate to get in touch at oil-products-argusmedia.com.