Fuel Oil Market - Forecast(2023 - 2028)

Fuel Oil Market Overview

The Fuel Oil Market size is forecast to reach US$221.2 billion by 2027, after growing at a CAGR of 4.1% during 2022-2027. Fuel oil is a liquid fuel obtained from the distillation of petroleum widely used in transportation, and power generation which consists of long-chain hydrocarbons, particularly alkanes, cycloalkanes, and aromatics. The transportation industry is the largest consumer of fuel oil. Also, fuel oil finds application in the petrochemical industry and petroleum refineries. According to the Organisation Internationale des Constructeurs d'Automobiles (OICA), Canada has produced around 1,115,002 motor vehicles, Mexico has produced 3,145,653, and the US has 9,167,214 units production in 2021. Therefore, the rise in the production of vehicles will increase the demand for the Fuel Oil Market during the forecast period.

COVID-19 Impact

The Covid-19 pandemic has been a major challenge for the Fuel Oil Market owing to directly affecting the manufacturer's supply chain across the globe and shutting down the production facilities to minimize the risk of virus spread. The major sectors such as transportation, industrial, and others have been highly impacted. According to the Organisation Internationale des Constructeurs d'Automobiles (OICA), Europe's auto production has dropped by more than 21% on average as major producing countries had sharp declines, ranging from 11% to almost 40%. In America, the 2020 auto production of 15.7 million units represented a 20% share of global production. The NAFTA region saw production declining by more than 20%, with U.S. manufacturing declining by 19%. South America dropped by more than 30%, with Brazil down by almost 32%. As the pandemic affected the markets in each country, the strengths and weaknesses of the transportation sector in each country will shape future outcomes. The initiation taken by the government and private sector will help to recover the Fuel Oil Market during the forecast period.

Report Coverage

The report: “Fuel Oil Market Report – Forecast (2022-2027)”, by IndustryARC, covers an in-depth analysis of the following segments of the Fuel Oil Industry.

Key Takeaways

• The Asia Pacific is expected to register a CAGR of 5.4% during the forecast period (2022-2027). The increasing demand for industrial, transportation owing to growing transport modes among Asian countries such as China, India, Japan, and South Korea is driving the Fuel Oil Market.
• The rising application of fuel oil in building materials, metallurgy, petroleum refineries, and the electricity industry will help to drive the demand for fuel oil during the forecast period.
• Robust demand for fuel oil in the power generation sector is expected to boost the demand for fuel oil during the forecast period.

Figure: Asia Pacific Fuel Oil Market Revenue, 2021-2027 (US$ Billion)

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Fuel Oil Market Segment Analysis – By Type

The distillates fuel oil segments accounted for around 78% of the market share in 2021 and are estimated to grow at a significant CAGR during the forecast period. Distillates fuel is one of the wide variety of fuels obtained from fractions boiling above the temperature at which gasoline comes off in the distillation of petroleum. Distillates of fuel oil are widely used for internal combustion vehicles with either mechanical transmissions or electric transmissions in automobiles, locomotives, and agricultural machinery as well as space heaters and power generators. According to the China Association of Automobile Manufacturers, the production of new energy vehicles in April 2022 is around 312,000 units which has 43.9% year-on-year growth as compared to the same period in 2021. Therefore, the rise in the production of the automobile will boost demand for fuel oil during the forecast period.

Fuel Oil Market Segment Analysis - By End-Use Industry

The transportation segment accounted for approximately 70% of the market share in 2021 and is estimated to grow at a significant CAGR during the forecast period. The rising production in the transportation sector is a growing demand for fuel oil globally. The fuel oil is produced from the burnable liquids derived from crude, also known as DERV (diesel), kerosene which are widely used in passenger vehicles and heavy commercial vehicles. According to Energy Information Administration, the petroleum product consumption in the U.S is around 18.12 million barrels per day, and the transportation sector holds 66% of the total consumption of petroleum products in 2020. Also, Jet fuel is the fourth most-used petroleum product in the United States with an average consumption of about 1.08 million barrels per day (45 million gallons per day) in 2020, accounting for about 6% of total petroleum consumption. Therefore, the growing consumption of fuel oil in the transportation sector will boost the demand for the Fuel Oil Market during the forecast period.

Fuel Oil Market Segment Analysis - By Geography

Asia Pacific region held the largest share in the Fuel Oil Market in 2021 up to 32%, owing to the growing industrial, automotive, residential, commercial, and large infrastructure projects, in developing countries like China, India, Indonesia, and others. The major factors responsible for the growth of foam oil are the presence of refineries and India & China's highest number of refineries globally. For instance, the oil refining capacity of India stood at 248.9 million metric tons per annum (MMTPA), making it the second-largest refiner in Asia after China. Private companies owned about 35% of the total refining capacity. Indian oil corporation is the largest domestic refiner, with a capacity of 69.7 MMTPA as of September 01, 2021, according to India Brand Equity Foundation. Also, the growing automotive industry is boosting the demand for fuel oil in APAC. According to the China Association of Automobile Manufacturers, the total production of passenger cars is around 996,000 units and commercial vehicle production is 210,000 units in April 2022. Therefore, the growing transportation and oil & gas sectors are boosting the demand for the Fuel Oil Market during the forecast period.

Fuel Oil Market Drivers:

The growing demand for fuel oil for heating applications

The growing demand for fuel oil for heating purposes is boosting the demand for fuel oil in the residential & commercial sectors. The fuel oil is used in boilers and furnaces, and for heating space in commercial, residential & industrial spaces. For instance, according to U.S Energy Information Administration, total fuel oil consumption in 2020 for heating purposes in residential, commercial & industrial buildings is around 3.78 million barrels per day (159 million gallons per day), equal to 21% of the total petroleum consumption in U. S. Therefore, the growing consumption of fuel oil for heating purpose in residential commercial & industrial space will be driving the Fuel Oil Market during the forecast period.

The rising demand for fuel oil from the oil & Gas Sector

The oil & gas sector is one of the major sectors for the consumption of fuel oil. The fuel oil is a residue of crude oil obtained after the distillation process. The demand for crude oil is increasing due to its growing consumption. For instance, the total global demand for crude oil is projected at 99.7 million barrels per day in 2022, with an increase of 2.1 million barrels per day from 2021 according to the International Energy Agency Oil Market report 2022. Also, in 2022, refinery intake is estimated to rise by 2.9 million barrels per day year on year to 80.8 million barrels per day globally. Therefore, the growing oil & gas sector will boost the demand for the Fuel Oil Market during the forecast period. 

Fuel Oil Market Challenges:

The rising demand for Biofuel is hindering the Fuel Oil Market

Biofuel is a fuel that is produced in a short period from biomass like wood and straw, which are released by direct combustion of dry matter and converted into a gaseous and liquid fuel. Biofuel is also considered pure and the easiest available fuel on earth. According to the U.S Energy Information Administration, the total production of the total monthly capacity of biodiesel fuel is around 1,817 million gallons in 2020 which is higher than the 2019 production of around 1,725 million gallons. Therefore, the growing production of bio-based fuel is likely to hamper the market growth.

Fuel Oil Market Industry Outlook

Technology launches, acquisitions, and R&D activities are key strategies adopted by players in the Fuel Oil Market. fuel oil's top 10 companies include

1. Exxon Mobil Corporation
2. Royal Dutch Shell plc
3. Chevron Corporation
4. Saudi Aramco
5. Total S.A
6. BP Oil International Limited
7. PJSC Gazprom
8. Sinopec
9. Kuwait Petroleum Corporation
10. Petrobras

Recent Developments

• In March 2022, Aramco, Hyundai Motor Group, and King Abdullah University of Science and Technology (KAUST) have agreed to jointly research and develop an advanced fuel for an ultra-lean-burn, spark-ignition engine that aims to lower the overall CO2 emissions of a vehicle.
• In March 2022, Huajin Aramco Petrochemical Company (HAPCO), a joint venture between Aramco, North Huajin Chemical Industries Group Corporation, and Panjin Xincheng Industrial Group, will develop the liquids-to-chemicals complex. Aramco has taken the final investment decision to participate in the development of a major integrated refinery and petrochemical complex in Northeast China to include 300,000 barrels per day refinery capacity and petrochemical units and is expected to commence operations in 2024.
• In March 2022, Aramco through its Saudi Aramco Asia Company Limited (SAAC) subsidiary signed a Memorandum of Understanding (MoU) with China Petroleum & Chemical Corporation (“Sinopec”) to support Fujian Refining and Petrochemical Company, Ltd. (“FREP”) in conducting a feasibility study into the optimization and expansion of capacity.
• In February 2022, Chevron U.S.A. Inc., a subsidiary of Chevron Corporation, and Iwatani Corporation of America (ICA), a wholly-owned subsidiary company of Iwatani Corporation, announced an agreement to co-develop and construct 30 hydrogen fueling sites in California by 2026.
• In February 2022, Chevron Corporation and Renewable Energy Group are in the process to acquire the outstanding shares of REG in an all-cash transaction valued at US$3.15 billion or US$61.50 per share. The acquisition combines REG’s growing renewable fuels production and leading feedstock capabilities with Chevron’s large manufacturing, distribution, and commercial marketing position.

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