The global crude oil supply landscape will change dramatically in 2021

Supported by increased attention to clean fuel policies after the epidemic, the IEA predicts that by 2025, the production of biofuels for transportation will reach 186.
1 billion liters, or 3.
21 million barrels per day, an increase of 14% from 2019 levels
.

The report predicts that on a global scale, biofuels will meet approximately 5.
4% of the energy demand for road transportation in 2025, compared to slightly less than 4.
8% in 2019
.

After shrinking by about 4% in 2020, next year may also become a turning point for LNG, which is a key component of raw materials for refineries and petrochemical plants, including ethane, propane, butane and natural gasoline
.

Platts analysis estimates that global natural gas supply is expected to be flat in 2021, and then continue to exceed crude oil growth
.

According to the IEA's long-term oil forecast, crude oil demand will increase by 4% in the next ten years, reaching a peak of 80.
6 million barrels per day by 2030
.

However, during the same period, LNG production will increase by 4% to 20 million barrels per day, accounting for almost one-fifth of the global liquid fuel pool
.

The return of strong growth in LNG supply means that the crude oil market share is shrinking
.

According to IEA, in the next 10 years, the demand for liquefied natural gas and biofuels will increase by 3 million barrels per day, reaching 23.
6 million barrels per day, accounting for 22% of global liquid fuels
.

***The outlook for oil refining is bleak***

Refiners in the United States and Europe feel most strongly about the global pandemic's destruction of oil demand.
Their profit margins have fallen sharply, and the rise in biofuel and LNG production will only exacerbate the bleak outlook
.

The increase in refining capacity in the Middle East and Asia is expected to exceed the rebound in fuel demand next year
.

Platts analysis estimates that the average growth of global oil refining demand in the next two years will be only 167,000 barrels per year, which is lower than the average growth rate of more than 800,000 barrels in the five years before the epidemic
.

Platts Analysis stated in a recent report: "The continuous influx of biofuel and LNG supplies will further drag down the supply of crude oil in 2021, which will squeeze the profit margins of existing refineries, especially in the demand for transportation fuels.
The recovery is slow and the closure of the refinery is inevitable
.
"

Wood Mackenzie estimates that by 2023, Europe’s 1.
4 million barrels per day of refining capacity is in serious threat of closure
.

The agency believes that by then, regional refining profit margins may fall to a new low, with 65% of factories with a zero or negative net cash profit margin
.

Terrible profits and low utilization rates may continue to drive the current trend that US and European refineries either retrofit existing refineries or initiate co-processing of renewable diesel or HVO (hydrotreated vegetable oil) in their facilities
.

The epidemic has also intensified the emphasis on chemical recycling technology, which will further curb demand for crude oil and expand the gap between production capacity and crude oil operations
.

With the outbreak of the epidemic, the global oil supply pool will undergo rapid changes next year.
Refiners may be most impressed by the acceleration of the theme of replacing low-carbon fuels, rather than the speed of demand rebound
.