Saudi Arabia’s refining strategy reflects a deliberate economic recalibration

Rather than exporting additional crude, it is now refining it at home, highlighting a policy shift to value-added products over raw commodity exports

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Aramco's Manifa oil field

Saudi Arabia’s refining strategy reflects a deliberate economic recalibration

Neil Quilliam

last update on 06 Jul 2025

Saudi Arabia is expanding its crude oil refining capacity to better adapt to the changing global energy market. The Kingdom is not merely responding to short-term market shifts but actively redefining how it leverages its hydrocarbon resources to maximise value creation and ensure long-term economic resilience.

Refining activity in Saudi Arabia surged to a two-year high in April 2025, according to data from the General Authority for Statistics. The Industrial Production Index (IPI) for refined petroleum products climbed from 97.4 in January to 123.5 in April—its highest level since at least January 2023. This upward momentum is part of a broader trend that began in March and connotes an ongoing move towards maximising downstream operations.

The increase in refining output coincided with the phased unwinding of OPEC+ voluntary cuts. Starting in April, a core group of eight producers, including Saudi Arabia, Russia, and the UAE, began easing 2.2 million barrels per day (bpd) of voluntary production cuts. Riyadh contributed the largest single increase, adding 130,000 bpd of supply in May, according to a Reuters survey. However, rather than exporting this additional crude, Saudi Arabia has channelled it into domestic refining—highlighting a policy preference for value-added transformation over raw commodity export.

The Joint Organisations Data Initiative (JODI) data for March showed refinery runs reaching 2.94 million bpd, approaching the record 2.96 million bpd set in April 2024. That level may have been surpassed in April 2025, despite a 60-day shutdown at the 400,000 bpd Petro Rabigh complex, which began on 15 April. The ability of other plants—notably Ras Tanura, SATORP, SAMREF, and YASREF—to compensate for the outage illustrates the overall sector’s growing capacity.

The decision to prioritise refining is a structural adjustment aimed at sustaining long-term energy competitiveness

Why it matters

Saudi Arabia's refining push reflects a broader shift in its energy monetisation strategy. By processing more crude oil domestically, the Kingdom is maximising revenue per barrel, building resilience against volatile oil prices, and accelerating the development of downstream industries, which is central to Vision 2030—including petrochemicals, logistics, and advanced manufacturing.

Total seaborne shipments of refined products—including diesel, gasoline, jet fuel, and fuel oil—fell from 1.58 million bpd in March to 1.48 million bpd in April. This decline, despite higher refinery activity, indicates the Kingdom's increasing reliance on domestic pipelines and overland distribution. It highlights the significant improvements made to the existing domestic infrastructure and the growing provision of logistics services, both of which will reshape future hydrocarbon export dynamics.

The decision to prioritise refining is more than a market response; it is a structural adjustment aimed at sustaining long-term energy competitiveness. In a world increasingly shaped by geopolitical shocks and the energy transition, Riyadh is positioning its energy sector to thrive not just in terms of volume but by developing an efficient and fully integrated service that responds to and accommodates global economic challenges.

Saudi Arabia's refining expansion is part of a broader industrial strategy that includes developing the petrochemicals and manufacturing sectors, among others. As such, the refining sector serves as the connective tissue between crude extraction and these higher-value industries. This integration enhances competitiveness across sectors—from plastics and fertilisers to speciality fuels and chemicals.

The international implications are notable. As more Saudi crude is refined domestically, global markets may see shifts in product availability, especially for diesel and jet fuel. These shifts could influence regional pricing and trade flows, particularly in Asia and Europe.

Investing in refining capacity helps preserve oil-based revenue streams while preparing for a lower-carbon future

Fuelling the future

The Kingdom's continued investment in refining capacity reflects a dual commitment to preserving oil-based revenue streams, whilst preparing for a lower-carbon future. For example, Saudi Aramco commissioned the Jazan Refinery—a full-conversion facility with a 400,000 bpd capacity—alongside the world's largest Integrated Gasification Combined Cycle (IGCC) power plant, reaching full operational output in early 2021.

In Jubail, it is advancing the SATORP "Amiral" expansion, with an $11bn Engineering, Procurement, and Construction (EPC) contract signed in June 2023 to produce 1.65 million tonnes per annum (mtpa) of ethylene and other industrial gases, with commercial operations targeted for 2027. By increasing domestic refinery runs and supporting value-added industries, Saudi Arabia is seeking to bridge its hydrocarbon legacy with a more diversified economic future.

Saudi Arabia's refining resurgence is not just a tactical pivot – it is reorienting its hydrocarbon export model. The Kingdom is redefining its role in global energy markets, signalling that it aims not only to export crude to key markets but also to take the lead in delivering refined, high-value products.

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