Wood Mackenzie: More than 20% of global refining capacity at risk of closure
5 April 2025
Although global oil demand is expected to grow, the long-term outlook for many refineries is uncertain, according to the global refinery closure outlook by Wood Mackenzie. The analysis assessed 420 refinery sites around the world and found that as many as 101 refineries are at risk of closure within the next decade.
The key risk factors for the refining sector include inflated operating costs driven by decarbonization policies and carbon taxes, combined with a drop in gasoline demand due to a shift toward electric vehicles. Refineries located in regions with escalating carbon pricing costs, including the EU, UK, and Canada, are especially exposed.
Wood Mackenzie’s net cash margin forecasts show that 101 out of 420 global refineries are at risk of closure by 2035. These sites represent around 18.4 million barrels per day (mb/d) of capacity, which is 21% of the current global capacity.
Refineries that are integrated with petrochemical units often perform better, generating stronger returns as demand for plastics and other chemical products continues to grow. Out of the 101 refineries flagged as at risk, only 29 are integrated with petrochemicals.
Europe and the Middle East together account for over half of the global refining capacity identified as at some risk by 2035. Europe and China hold the majority of high-risk sites, with Europe home to 60% of them.
In North America, 1.5 mb/d of capacity across eight sites in the USA, Canada, and Mexico are assessed as medium or low risk with all refineries lacking the advantages of petrochemical integration.
Refinery closures could result in a market and/or geographical imbalances that will make refined products—particularly diesel fuel—more expensive. Examples of refineries already scheduled for closure include the Grangemouth refinery in Scotland, LyondellBasell’s Houston oil refinery, and the Los Angeles refinery of Phillips 66.
In spite of the risks faced by refining industry, Wood Mackenzie and other analysts expect global oil demand to grow. However, the global crude oil output—measured using the crude oil & lease condensate definition which excludes other non-crude liquids—has been stagnant for several years. According to data by the US Energy Information Administration (EIA), the world’s crude oil production in December 2024 was 82.386 mb/d. This is still 0.8% below the post-covid peak of December 2023 (83.016 mb/d) and 2.6% below the EIA figure for the global peak reached in November 2018 (84.592 mb/d).
Source: Wood Mackenzie