Gulf refiners are pushing ahead with a number of new refineries which could add almost 2.5mn b/d to regional crude distillation capacity over the next five years. The refineries are being built not only to keep pace with rapidly rising local demand for transport fuels, but also to enable Gulf oil producers to squeeze extra revenues from their crude streams.

Some of the new output will be available for export, at least in the near term. OPEC sees Middle East products demand increasing by 600,000 b/d in the period to 2016, while regional crude distillation capacity rises by 1.8mn b/d (MEES, 16 November 2012). However, the International Energy Agency (IEA) sees much of the incremental production staying within the region: Middle East oil demand is forecast to grow by 1.7mn b/d in 2011-17, while refining capacity additions over the period are expected to be 1.9mn b/d (MEES, 26 October 2012). (CONTINUED - 623 WORDS)