The Zhitong Finance App learned that according to people familiar with the matter, the Ruwais refinery under the Abu Dhabi National Petroleum Company (Adnoc) has resumed operation at full capacity. The refinery was previously attacked during the conflict in the Middle East and stopped production for a while. As production capacity recovers, Adnoc is increasing exports of refined oil products such as diesel and aviation fuel, which is expected to bring some relief to the current tight global refined oil market.
Ruwais refinery has a crude oil processing capacity of 922,000 b/d, making it one of the largest refining facilities in the world. People familiar with the matter said that the refinery had resumed operation at full capacity about a month ago. People familiar with the matter said that as the Ruwais refinery resumes production, Adnoc is increasing exports of refined oil products such as diesel and aviation fuel.
However, although refinery production capacity has returned to normal levels, Adnoc's overall fuel exports have yet to fully return to pre-conflict levels. Currently, the company's exports of refined oil products have recovered to about 70% before the war.
According to data from market research firm Vortexa, in the first two months of this year before the Middle East conflict broke out, Adnoc exported about 600,000 barrels of petroleum products such as diesel, aviation fuel, and naphtha every day.
The recovery of the Ruwais refinery has received particular market attention, as the facility usually exports a significant portion of its production overseas, with Europe being one of the key destinations for diesel. Therefore, in the current context of tight global supply of refined oil products, Ruwais's resumption of production at full capacity is expected to increase the supply of diesel and aviation fuel in the international market.
Ruwais is not the only Middle East refining facility to resume production capacity recently.
Energy research agency IIR Energy said last week that overall refining activity in the Middle East is slowly picking up, with supply at Kuwait's Mina Al Zour refinery also increasing. The resumption of production and increased exports at these refining facilities may bring some relief to the global refined oil market.
Previously, the Middle East conflict blocked local oil refining and shipping activities. Meanwhile, Ukrainian drones continued to attack Russian refineries, further reducing the supply of refined oil products in the international market. The combination of the two conflicts caused the prices of petroleum products such as diesel and aviation fuel to remain high for a long time, and new inflationary pressure was transmitted to the global economy through energy costs.
The current level of tension in the global refined oil market is particularly evident in the diesel market. As supply is limited, the price premium for diesel versus crude oil has risen to its highest level in more than 15 years. This indicator generally reflects refining profits from processing crude oil into diesel and market supply and demand conditions. Its sharp rise indicates that the current diesel supply is still very tight.
Europe is particularly sensitive to the recovery of the Ruwais refinery. The refinery has been exporting diesel to the European market for a long time, so the recovery of its production capacity is expected to increase European diesel supply and ease the pressure on local fuel prices to a certain extent.
However, at present, Adnoc fuel exports have only recovered to about 70% before the war, which means that even if the refinery itself has resumed full operation, the relevant export and logistics systems have not fully returned to the pre-conflict state.
The Ruwais refinery was forced to shut down production in March of this year due to an Iranian drone attack. The attack caused a fire in the area where the refinery was located, and the facility later stopped operating.
In fact, prior to the attack, the refinery had been reducing operating rates for several weeks. Shipping in the Strait of Hormuz was restricted at the time, and it was difficult for some raw materials and refined oil products to enter the international market normally, forcing Ruwais to reduce its production load.
As one of the most important energy transportation channels in the world, the blockage of shipping in the Strait of Hormuz not only affects Middle Eastern crude oil exports, but also has an impact on the supply of raw materials for refineries and exports of refined oil products such as diesel, aviation fuel, and naphtha.