Goldman Sachs Warns of Global Refining Crisis Through 2027
Goldman Sachs analyst Nikhil Bhandari warns that a stretched global refining system could keep fuel prices elevated through 2027 due to capacity losses.
Energy analyst Nikhil Bhandari of Goldman Sachs warned that a global refining crisis could keep diesel and gasoline prices elevated through 2027. He argues that the global refining system is too stretched to support a full recovery in fuel demand while inventories are rebuilt.
Bhandari projects net capacity losses in 2026, estimating that 600,000 barrels a day of closures will offset 300,000 barrels a day of additions on an ex-China basis. He asserts that reaching the utilization levels required for a full demand rebound is not "operationally realistic," meaning refining margins must remain high to restrain consumption and keep demand within current supply capabilities.
The analyst predicts a significant decline in fuel reserves, suggesting global refined-product inventories could drop to 2015 levels by the fourth quarter of 2026. Furthermore, he expects OECD inventories to hit historical minimums not seen since approximately 2003 by the second quarter of 2027.
