5 April 2019: Refining capacity in Asia has been growing rapidly for many years, driven by continued growth in refined product demand in the region. The Middle East has also added significant capacity. While growing domestic demand is a driver in the Middle East as well, the large crude oil producers in the region, like Saudi Arabia and Kuwait are also motivated by diversifying their economies and producing more value-added products. Over the next five years (2019-2024), the IEA expects that the global downstream industry will add as much as 9.1 million barrels per day (mb/d) in refining capacity, with markets “East of Suez” (Middle East and Asia) taking care of two-thirds of the total. Since this region will also be the source of two-thirds of refined products demand growth, it appears at first glance that supply and demand are in balance. However, there is a significant discrepancy: the IEA forecasts that the expansion in global refining capacity in the years 2019-2024 is twice the size of worldwide product demand growth over the same period. From the perspective of a product tanker owner, the question is: will this be good or bad for the product tanker market?
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