Wood Mackenzie estimates that approximately 20% of the world’s existing oil refining capacity faces an increasing risk of closure as global refined product demand approaches its projected peak of 108 million barrels per day in 2032, up from 105 million barrels per day in 2025. As demand begins to decline, refineries with higher operating costs, limited complexity, and weaker competitive positions could face shrinking margins and financial pressure. With more than 700 refineries worldwide, the industry faces a narrowing window to make investment and restructuring decisions ahead of 2040.
The impact will vary by fuel type and region. Gasoline faces the greatest pressure from growing electric vehicle adoption, while diesel and jet fuel demand are expected to remain more resilient. Large, complex, and integrated refineries, particularly in the United States, the Middle East, and parts of Asia, are better positioned to adapt by expanding petrochemical production, renewable fuels, and specialty products. European coastal refineries and smaller, less complex facilities face greater competitive challenges, while India is expected to account for approximately 40% of global refining capacity additions through 2030.
Wood Mackenzie says refineries will need to pursue strategies such as petrochemical integration, renewable fuel production, carbon capture, capacity consolidation or conversion to specialty products to remain competitive. However, significant investment requirements and relatively low industry returns could limit these options. The report anticipates an increasingly divided refining industry, with advanced integrated energy facilities continuing to operate while less competitive refineries face restructuring, conversion, or permanent closure.
