Dangote refinery poised to reach full capacity amidst global oil demand surge

Dangote Refinery is anticipated to achieve its maximum production of 650,000 barrels per day by the second quarter of this year, aligning with China’s role in driving global oil demand to reach two million barrels per day (bpd), pushing the total demand to approximately 103 million bpd.

According to a recent outlook from Wood Mackenzie, obtained by The Guardian, an additional 600,000 bpd is projected to be added to refining capacity this year, with emphasis on high utilization rates and the successful ramp-up of Middle East capacity. 

The report singles out Dangote Refinery as a pivotal factor, predicting a successful ramp-up to its full capacity by the end of the second quarter.

Alan Gelder, Senior Vice President of Research at Wood Mackenzie, highlighted the impact of OPEC+ production on middle distillates, anticipating a rise in yield.

Gelder emphasised that easing interest rates and rebalancing gross domestic product (GDP) are crucial for distillate demand growth.

The research indicates a nearly two million barrels per day increase in crude oil demand in 2024, with China contributing over 25% to this surge.

The report, titled ‘Oil and Chemicals: Five Things to Watch in 2024,’ identifies key growth markets including three emerging Asian markets—Indonesia, Vietnam, and Thailand—along with the United States.

Wood Mackenzie anticipates significant growth in oil demand during the second half of the year, fueled by improved economic growth and lower interest rates.

However, the report warns that oil supply might lag behind demand growth due to OPEC+ supply cuts slowing progress throughout 2024.

Highlighting the importance of production restraint, the report suggests that without such measures, the market could lean towards oversupply, particularly if demand growth falls below expectations.