As crude prices tumble amid OPEC+’s aggressive production hikes, Saudi Arabia is turbocharging its refineries to lock in robust fuel profits—a strategic pivot that’s helping the kingdom cushion its budget from the oil market’s volatility.
Refining at Record Levels
🛢️ Domestic Processing:
- 2.94M bpd refined in March 2025 (near all-time high).
- 12% monthly surge in crude intake, offsetting a 12% drop in exports.
🌍 Global Footprint: - 4.3M bpd overseas refining capacity (China, U.S., Malaysia).
- Aramco now processes 28% of its crude domestically (up from 26% in 2023).
Why It Matters
💰 Margin Savior:
- Singapore refining margins at $8/barrel (highest since Feb 2024).
- Diesel demand remains strong despite trade war fears.
⚔️ Price War Armor: - OPEC+ is flooding markets (+2.2M bpd since April), crushing crude prices (~$65/barrel).
- Refining profits help Riyadh cope with $90/barrel budget breakeven (IMF estimate).
Market Realities
📉 Crude Glut: Trump’s tariffs and OPEC+ hikes threaten prolonged low prices.
✈️ Summer Demand Boost: Peak driving/flying season to prop up margins until September.
🔄 Strategic Flexibility: Aramco can shift crude to refineries vs. exports as needed.
What’s Next?
- More OPEC+ Output: Saudi may accelerate cuts unwind at June meeting.
- Refining Resilience: Elevated runs to continue unless margins collapse.
- Budget Calculus: If Brent stays below $70, Riyadh may tap reserves or borrow.
Saudi Arabia’s Refining Boom Shields Economy From Oil Price War