The largest oil exporter in the entire globe, Saudi Arabia, is increasing its refining activities in an effort to lessen its need for unstable crude prices.
The kingdom is absorbing higher profit margins and lessening the impact of declining exports and declining world oil prices by refining more oil both domestically and elsewhere.
Saudi refineries processed 2.94 million barrels per day (bpd) in March, setting a new monthly record. This figure came just below the all-time high of 2.96 million bpd reached in April 2024.
It represents a 23% increase over the 10-year standard and a 12% increase from February. Crude shipments dropped 12% to 5.75 million barrels per day at exactly the same time.
This change demonstrates the kingdom’s increasing inclination to refine oil instead of selling it.
Saudi Arabia runs nine domestic refineries with a combined capacity of 3.33 million barrels per day and oversees an additional 4.3 million barrels per day in China, Malaysia, and the United States.
Sales of refined energy sources, such as petroleum, diesel, and jet fuel, reached a record 1.58 million barrels per day in March.
Due to regular consumption, these slightly declined in April as well as May.
Strong Refining Margins Help Stability
Domestic refining of Saudi Aramco’s crude rose from 26% in 2023 to 28% in 2024.
OPEC+ is steadily unwinding its 2.2 million bpd production cuts, increasing market supply.
The rise in output puts further strain on suppliers at a time when global demand is still uncertain.
Since the month of January, oil prices have decreased from $82 to $65 per barrel. However, Saudi Arabia’s expanding refining capacity provides a crucial buffer.
Saudi Arabia needs oil at $90 a barrel, according to the IMF, to balance its budget. Refining offers a potent tool to withstand the storm, as prices are expected to recover very soon.
