The US-Israel war against Iran has cut global refining capacity by more than 5mn b/d, either because plants have been forced offline or because operators have cut runs due to crude supply constraints, trading firm Vitol said.
About 3mn b/d of refining capacity has fallen offline in the Mideast Gulf since the conflict began, Vitol analyst Simon Warren told the ARDA Conference in Cape Town today. A further 2mn-3mn b/d of capacity outside the region is also not operating because of the war, largely because of lost Mideast Gulf crude supplies. Asia-Pacific refinery throughput has been most heavily affected.
"We're in the eye of the disruption," Warren said. Even if the war ended now, it could take 3-4 months to bring the shuttered refining capacity in the Mideast Gulf back online, he added.
Upstream, the Middle East has lost 12mn b/d of crude output, and it could take many weeks to restart the thousands of oil wells that have been shut in because of the conflict, Warren said. He estimates net crude exports from the Mideast Gulf have declined by 9mn b/d since the start of the war.
Vitol estimates global oil demand will be around 100mn bl lower this year than it otherwise would have been. Mideast Gulf jet fuel demand has declined by about 300,000 b/d because of the conflict, Warren said.
Vitol expects Middle East GDP to fall by 2pc this year as the regional tourism industry takes a hit. But despite the inflationary effects of the war, the firm is not currently forecasting a global economic downturn.
