Adnoc's Ruwais refinery has resumed full capacity operations, and the increase in diesel exports is expected to alleviate supply pressures in Europe.

According to insiders, the Ruwais refinery, part of the Abu Dhabi National Oil Company (Adnoc), has resumed full production. The refinery had previously been attacked during conflicts in the Middle East and was temporarily shut down. As production capacity rebounds, Adnoc is increasing exports of diesel, aviation fuel, and other refined products, which is expected to alleviate some of the supply constraints in the currently tight global refined oil market. The Ruwais refinery has a crude oil processing capacity of 922,000 barrels per day, making it one of the largest refining facilities in the world. Insiders indicated that the refinery had returned to full production about a month ago. As Ruwais resumes production, Adnoc is ramping up exports of diesel, aviation fuel, and other refined products. However, despite the refinerys capacity returning to normal levels, Adnocs overall fuel exports have not yet fully recovered to pre-conflict levels. Currently, the companys refined product export volume has returned to around 70% of what it was before the conflict. According to market research firm Vortexa, in the two months prior to the outbreak of the conflict in the Middle East, Adnoc was exporting approximately 600,000 barrels per day of oil products such as diesel, aviation fuel, and naphtha. The restoration of the Ruwais refinery is especially noteworthy for the market, as this facility typically exports a significant portion of its output overseas, with Europe being one of the key destinations for its diesel. Therefore, in light of the current global supply constraints for refined oil products, the Ruwais refinery's return to full production is expected to bolster the supply of diesel and aviation fuel in international markets. Ruwais is not the only Middle Eastern refinery to have recently restored its production capacity. Energy research firm IIR Energy stated last week that overall refining activity in the Middle East is slowly recovering, with supplies from Kuwait's Mina Al Zour refinery also on the rise. The restoration of these refineries and their increased exports could provide some relief to the global refined oil market. Previously, conflicts in the Middle East had disrupted local refining and shipping activities, while ongoing drone attacks on Russian refineries from Ukraine further squeezed refined oil supplies in the international market. The compounded effects of these two conflicts have kept prices for diesel, aviation fuel, and other oil products elevated for an extended period, creating new inflationary pressures on the global economy through energy costs. The current tightness in the global refined oil market is particularly evident in the diesel market. With supply constrained, the price premium of diesel relative to crude oil has risen to its highest level in over 15 years. This metric typically reflects the refining profit for processing crude oil into diesel and the supply-demand conditions in the market, and its significant increase indicates that diesel supply remains extremely tight. Europe is particularly sensitive to the recovery of the Ruwais refinery. The refinery has long exported diesel to the European market, so its restored capacity is expected to increase diesel supplies in Europe and partially alleviate local fuel price pressures. However, Adnoc's fuel exports have only recovered to about 70% of pre-conflict levels, meaning that even though the refinery itself is back to full production, the related export and logistics systems have not yet fully returned to their state before the conflict. The Ruwais refinery was previously forced to shut down in March this year due to an Iranian drone attack. The attack caused a fire in the area where the refinery is located, leading to the facility ceasing operations. In fact, prior to the attacks, the refinery had been reducing its operating rate for several weeks. At that time, shipping through the Strait of Hormuz was restricted, making it difficult for some raw materials and refined products to enter the international market normally, forcing Ruwais to lower its production load. As one of the most important energy transport corridors in the world, disruptions to shipping in the Strait of Hormuz not only impact Middle Eastern crude oil exports but also affect the supply of raw materials for refineries and the export of refined products such as diesel, aviation fuel, and naphtha.