Morgan Stanley Warns Deferred Refinery Maintenance to Prolong Global Fuel Market Tightness Through 2027

Morgan Stanley has forecast that global fuel markets will remain under significant strain until at least mid-2027, attributing the prolonged tightness to deferred refinery maintenance that will peak in the second quarter of that year.

According to the bank’s analysis, planned refinery maintenance is set to reach a high of 3.4 million barrels per day (bpd) in Q2 2027. This figure is two and a half times the average capacity typically taken offline during global spring maintenance, a move that underscores the degree to which refiners have postponed outages to maintain supply amid already tight market conditions.

The deferral strategy has helped keep fuel flowing, but Morgan Stanley warns that the resulting concentration of maintenance could create acute supply shortages, especially in the diesel and gasoil markets. The second quarter of 2027 is expected to see the largest volume of capacity out of service, tightening supply just as demand is projected to remain robust.

In September, diesel prices surged to an all-time high of over $200 a barrel, nearly doubling the price of crude oil and far outpacing pre-crisis benchmarks. International Energy Agency (IEA) data has highlighted similar concerns, noting that the mismatch between product supply and demand continues to drive volatility and elevated refining margins worldwide.

The extended period of tightness has immediate implications for Europe and Latin America. European refiners, already facing regulatory and feedstock challenges, may see further upward pressure on wholesale fuel prices. Latin American economies, many of which rely on fuel imports, could encounter higher costs and increased price volatility, impacting transport and industrial sectors.

For investors and fuel suppliers, the forecasted tightness presents both risk and opportunity. While supply constraints threaten to push prices higher, refiners able to navigate maintenance schedules efficiently stand to benefit from sustained high margins. Companies with flexible supply chains or access to alternative feedstocks may be better positioned to weather the coming supply shocks.

Should further delays in refinery maintenance occur, Morgan Stanley cautions that fuel availability could be further compromised, heightening the risk of price spikes. Market participants are closely watching how refiners plan to stagger maintenance in an attempt to avoid exacerbating shortages.

Longer-term, the post-2027 outlook will hinge on whether refiners can return to regular maintenance cycles and bring additional capacity online. Until then, the market faces continued pressure from deferred outages, persistent supply constraints, and the risk of renewed price surges.