Saudi Arabia’s state-owned oil giant Aramco said on Tuesday that years of underinvestment in global refining capacity have amplified the impact of the current oil supply crisis, as fuel demand remains resilient despite market disruptions.
Speaking at the S&P Global Energy Middle East Petroleum and Gas Conference in London, Aramco Vice President for Market Analysis and Sustainability Musaab Al Mulla said about 3 million barrels per day (bpd) of refining capacity was shut down globally between 2020 and 2023.
Al Mulla said the loss of refining capacity has left energy markets more vulnerable to supply shocks, arguing that the availability of those refineries could have helped cushion the effects of the ongoing crisis.
His comments come as the conflict involving Iran, attacks on regional energy infrastructure and Tehran’s effective closure of the Strait of Hormuz, followed by a U.S. naval blockade, have severely disrupted oil flows from the Middle East.
The disruptions have removed an estimated 14 million bpd of crude supply from global markets, creating one of the most significant supply shocks in recent history.
According to Al Mulla, the current market turmoil highlights the need for continued investment across the oil value chain, particularly in refining, to ensure energy security and supply reliability.
He noted that while oil demand has remained robust, refining capacity has not expanded at the same pace, creating bottlenecks that can intensify market volatility during periods of geopolitical tension.
The remarks underscore growing concerns within the energy industry that insufficient downstream investment could leave consumers and economies more exposed to future supply disruptions.
Industry participants at the conference said maintaining adequate refining infrastructure will be critical to balancing fuel markets and mitigating the impact of future crises.
The comments add to a broader debate over long-term energy investment strategies as governments and companies navigate the transition to lower-carbon energy sources while ensuring sufficient conventional fuel supplies.