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Global Refinery Capacity Stalls as Indian Projects Face Delays, TPH Says

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Global refinery capacity growth will be more modest than previously anticipated this year as significant projects in India are pushed into 2027, TPH Energy strategists said in a note on Friday.

TPH projects a net increase of 800,000 barrels per day in global refining capacity for 2026, a downward revision from the 1.2 million b/d originally forecast.

Matthew Blair, analyst at TPH, said that the shift is primarily driven by delays at the 180,000 b/d Oil India/Assam refinery and the 200,000 b/d Indian Oil/Panipat project.

However, despite the 2026 slowdown, the outlook for 2027 has been raised to 1.0 million b/d of growth, up from the previously expected 500,000 b/d, as deferred Indian projects come online alongside smaller additions in the US and the Middle East.

TPH said that, combined, the two-year outlook for global capacity growth has been slightly increased to 1.8 million b/d from 1.7 million b/d.

The Middle East remains a central driver of the industry's expansion, accounting for over half of net global capacity additions. Furthermore, TPH said that two refinery expansions in Iran remain on track despite regional geopolitical tensions.

Though capacity expansion remains a key metric for the sector, TPH said that reduced utilization rates at existing refineries have been a more influential factor in tightening global supply-and-demand balances, ultimately supporting refining margins.

The sector experienced a volatile start to the year, with global refining runs hitting three-year highs in January and February before falling sharply amid the US-Iran conflict and Ukrainian drone strikes on Russian refineries.

The International Energy Agency said global refining runs are currently tracking at 82.0 million b/d for 2026. TPH said this represents a 2 million b/d year-over-year decline, a contraction that significantly outweighs the 1.1 million b/d drop in global product demand projected for the same period.

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