Older oil refineries in Britain and the United States could soon face the threat of closure as a wave of new plants start up in Asia and the Middle East and flood the market with gasoline.

For over three years, a lack of spare refining capacity has boosted global oil prices and contributed to oil’s bull run to this week’s record of over $112 a barrel. Gasoline has been one of the drivers, but new supply is set to outstrip demand. “We are heading now for a global surplus,” said Fereidun Fesharaki, chief executive of FACTS Global Energy. 
“There is a wall of refining capacity coming onstream in 2008-2009 and another in 2013. It’s changing the structure of the refining industry. Who will be the last man standing? I don’t know.”
Production from new refineries in Asia and the Middle East will cut global refining profit margins and hurt the refiners most susceptible to both market forces and gasoline markets, said Johannes Benigni, managing director of JBC Energy.
“UK plants are the most exposed,” Benigni said. “They are not in good shape. They rely on gasoline exports to the US. Eventually, they will either have to reduce runs and if they can’t adapt, will have to look at closure.”