Wood Mackenzie Warns One in Five Refineries Faces Closure
Research estimates about 20% of existing global refining capacity is on a downward path with falling or negative operating margins.
Updated on Nov. 5, 2026 in Oil and Gas
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Wood Mackenzie research estimates that about one in five global oil refineries faces increasing closure risk. Global refined product demand currently stands at 105 million barrels per day.
Why it matters
Global oil demand is entering structural decline due to electric vehicle adoption and decarbonisation, with gasoline facing the sharpest pressure. Current elevated refining margins are driven by the Middle East conflict and damage to Russian refineries, and they are expected to ease when the conflict ends.
Refinery competitiveness is measured by net cash margin per barrel of throughput on a complexity scale of 1 to 25, with large high-complexity US Gulf Coast, Middle East and Dangote refineries ranked most competitive. Small, low-complexity refineries, many NOC-owned in developing countries, survive only through subsidies.
The players
Wood Mackenzie
Wood Mackenzie is a global energy consultancy whose Refinery Evaluation Model and Product Markets Service underpin industry forecasts.
The details
Refining margins are set by crack spreads rather than the oil price, and the analysis assesses cash from refining operations after feedstock and operating costs. Diesel, gasoil and jet fuel are more resilient than gasoline, while investment continues in India on domestic demand and energy self-reliance grounds.
Timeline
2025: global refined product demand measured at 105 mb/d
2030: India expected to account for 40% of refining capacity additions
2032: global refined product demand forecast to peak at 108 mb/d before declining
2040: roughly three to four refinery turnaround cycles away
Market Landscape
Wood Mackenzie's net cash margin framework places refinery competitiveness against the rising pressure of electric vehicle adoption on gasoline demand. Diesel and jet fuel's relative resilience leaves complex, large-scale refineries better positioned than small, subsidy-dependent plants in developing countries.
Fuel prices and availability for gasoline may be affected as small, low-complexity refineries close and capacity consolidates into large, complex sites. Diesel and jet fuel supply is expected to hold up better than gasoline as demand shifts.
The takeaway
Gasoline demand is most exposed to electric vehicle adoption, so the refineries most likely to endure are those with high complexity and scale. Watching refining margins alongside demand forecasts will show which plants remain viable.
Further reading
Explore more on Oil and Gas for the broader market forces reshaping refinery economics.
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