Global refining capacity has declined by more than 5 million barrels per day (bpd) following supply disruptions linked to the ongoing conflict involving the United States, Israel, and Iran, according to energy trading firm Vitol.
Speaking at the ARDA Conference in Cape Town, Vitol analyst Simon Warren said the disruption stems from a combination of refinery shutdowns and reduced processing rates caused by limited crude oil availability.
He noted that approximately 3 million bpd of refining capacity in the Middle East Gulf has gone offline since the conflict began. In addition, between 2 million and 3 million bpd of refining capacity outside the region has also been affected, largely due to reduced access to crude supplies from the Gulf.
According to Warren, refineries across the Asia-Pacific region have experienced the most significant impact, as operators adjust throughput in response to supply constraints.
“We’re in the middle of a major disruption,” he said, adding that even if hostilities were to cease immediately, it could take between three and four months to restore idle refining capacity in the Middle East Gulf.
Upstream operations have also been heavily affected. The Middle East region has seen an estimated loss of about 12 million bpd in crude oil production, while net exports from the Gulf have declined by roughly 9 million bpd since the onset of the conflict.
Warren explained that restarting production could be a prolonged process, as thousands of oil wells that were shut in during the crisis would require several weeks to resume normal operations.
Beyond supply disruptions, the conflict is also weighing on global demand. Vitol estimates that worldwide oil demand could fall by around 100 million barrels over the course of the year compared to earlier expectations.
Jet fuel consumption in the Middle East Gulf has also declined, with demand dropping by approximately 300,000 bpd, reflecting reduced aviation activity tied to the regional instability.
While the full economic implications are still unfolding, the combined effects of constrained supply, reduced refining capacity, and weaker demand underscore the scale of the disruption currently affecting global oil markets.