Refined products demand outlook for 2025

Refined product demand is forecasted to grow by 0.88 Mbd y/y in 2025, down from 1.40 Mbd in 2024 and 3.43 Mbd in 2023, continuing a trend of slowing growth since 2021. This Research Update provides a breakdown of growth by product and region, alongside the key drivers influencing these trends.

World petroleum product demand y/y growth (Mbd)

Source: Kpler

In 2025, global refined product demand growth will be driven primarily by Asia, accounting for nearly 60% of total growth. LPG, gasoline, and jet fuel/kerosene are expected to lead demand increases, distributed more evenly as post-COVID transport fuel demand recovery wanes. China remains central to this outlook, but this year for opposite reasons, as its demand growth significantly decelerates due to mounting pressures on investment-led economic growth and increasing adoption of alternative powertrains. This trend, coupled with weak to declining demand growth in OECD countries, limits global refined product demand growth, leaving the disconnect between refinery closures in Europe and the US and new refinery ramp-ups as the main factor underpinning the projected tightness of transport fuels in H1-2025.

LPG demand growth y/y (kbd)

Source: Kpler

LPG will lead demand growth among refined products in 2025, with an estimated increase of 230 kbd y/y. Asia and, to a lesser extent, Europe will be the primary contributors:

• Asia: LPG growth will halve compared to 2024. Given that strong growth in India and Southeast Asia will continue as demand for cleaner cooking fuels rises and the former adds a new PDH plant, declining Chinese demand becomes the main culprit for the slowdown. In the current global environment of slower plastics consumption growth and protectionist policies, only two planned PDH plants will come online this year in China, while several others have been cancelled, postponed, or delayed.
• Europe: Growth will stem from Borealis’ new PDH plant in Kallo, Antwerp, which is expected to come online by May and contribute an additional 30 kbd of propane demand.

Naphtha demand growth y/y (kbd)

Source: Kpler

Naphtha demand growth will remain subdued in 2025, reflecting ongoing challenges in Asia and Europe:

• Asia: The significant slowdown in naphtha demand growth in Northeast Asia observed in 2024 is expected to persist into 2025. Prohibitive cracking margins, driven by a base chemicals overhang, have led to cracker shutdowns and reduced run rates across the region. With Trump’s high-tariff policies targeting Chinese industry and trade surplus, cracking margins are likely to remain depressed. Therefore, despite plans for several naphtha crackers to come online in China, we expect less than half of the projected naphtha demand growth to materialize. Moreover, with Taiwan and South Korea unable to access discounted Russian barrels due to updated US sanctions, OECD Asian chemical producers face further rationalization and run cuts, painting a bleak outlook for naphtha demand growth this year.
• Europe: Trump’s tariffs could impact car manufacturing and plastics consumption, worsening cracker margin challenges that have already led PKN Orlen to delay its Olefins petrochemicals project until 2030. With margins unlikely to improve significantly in 2025, flexible crackers are expected to shift to LPG in H2-2025. Additionally, Italy’s planned closure of its last two steam crackers in Q4-2025 will further reduce regional naphtha demand.
• Russia: The completion of the Nizhnekamsk petrochemicals plant will add approximately 40 kbd of naphtha demand, representing one of the few significant upsides for the year.

Gasoline demand growth y/y (kbd)

Source: Kpler

Global gasoline demand growth is expected to slow significantly, increasing by just 230 kbd y/y in 2025 (see Demand for Gasoline section for a more detailed analysis):

• China: Steady growth in the car fleet will support gasoline demand, but rising EV adoption will temper gains as the market approaches a potential peak in 2027.
• United States: Gasoline demand is projected to decline by 50 kbd y/y due to stagnant traffic growth and increasing penetration of EVs, HEVs, and more efficient ICE vehicles.

Jet fuel/Kerosene demand growth y/y (kbd)

Source: Kpler

Jet fuel/kerosene demand growth is forecasted to decelerate sharply, from 470 kbd in 2024 to 210 kbd in 2025:

• The recovery in air traffic from COVID-19 restrictions is nearly complete, and improvements in aircraft efficiency further limit demand growth.
• The recovery in air traffic that has not occurred, and is expected to be lost at least in the short to medium term, is concentrated on international routes involving China, which is reflected in its increased share of jet fuel exports to total CPP loadings.

Gasoil/Diesel demand growth y/y (kbd)

Source: Kpler

Gasoil/diesel demand is forecast to grow modestly by 160 kbd y/y, reaching 29.97 Mbd in 2025 (see Gasoil/Diesel Demand section for a more detailed analysis):

• Europe: A declining diesel car fleet will weigh on demand, though easing interest rates are expected to support a recovery in its industrial sector. New Emission Control Area (ECA) rules in the Mediterranean starting May 1 will also increase marine gasoil demand, partially offsetting regional declines.
• United States: Diesel demand is forecasted to grow by 40 kbd y/y, recovering from a 70 kbd contraction in 2024 as manufacturing and freight show signs of improvement.
• China: Diesel demand growth is expected to decelerate significantly, increasing by just 10 kbd y/y due to LNG truck adoption and mounting pressures on its investment-led economic model.

Fuel oil demand growth y/y (kbd)

Source: Kpler

Fuel oil demand is projected to decline by 120 kbd y/y in 2025, as world countries continue to replace it in the power generation and industrial sectors with 'cleaner' sources.

• Europe: In addition to the abovementioned driver, the Med’s new ECA puts 250 kt to 400 kt per month of VLSFO demand at risk of substitution. FuelEU Maritime regulations, which came into effect from January 1, will also increasingly weigh on fuel oil bunkering demand.  
• Russia: Increased domestic natural gas consumption following EU sanctions on Russian gas imports and the expansion of nuclear power capacity will continue to weigh on fuel oil demand.
• Middle East: The ongoing transition to natural gas, renewables and nuclear power, including the Barakah nuclear power plant in the UAE, will continue to reshape the region's energy landscape.
• China presents further downside potential for Asia's fuel oil demand outlook. Soft refined product demand growth and the sweeping recent sanctions on Russian oil exports will further pressure demand for refinery feedstocks. Moreover, China's feedstock consumption is already under pressure from the January 1 increase in fuel oil import tariffs from 1% to 3%, all of which can be exacerbated by Trump's promises to expand sanctions on Iran.

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