A paradigm shift

Saudi Arabia is expanding their refining nameplate capacity to 3.6 million barrels per day. It is hard to reconcile such large capital expenditures in a context where the Saudis have diminished expectations about their future oil production. They will not want that expensive capacity sitting idle, nor the petrochemical industry upon which it depends. The Persian Gulf countries are planning for a future where global oil spare capacity stays tight and refining margins remain high. They will increasingly export gasoline and ethylene, not crude oil.

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