United States Oil Refining Market Segmented By Complexity Type (Topping, Hydro-Skimming, Conversion, and Deep Conversion), By Product Type (Light Distillates, Middle Distillates, Fuel Oil, and Others), By Fuel Type (Gasoline, Gasoil, Kerosene, LPG, and Others), By Application (Transportation, Aviation, Marine Bunker, Petrochemical, Residential & Commercial, Agriculture, Electricity, Rail & Domestic Waterways, Others), By Region, and By Competition, 2021-2031F

Forecast Period	2027-2031
Market Size (2025)	USD 16.78 Billion
CAGR (2026-2031)	4.18%
Fastest Growing Segment	Middle Distillates
Largest Market	South
Market Size (2031)	USD 21.45 Billion

Market Overview

The United States Oil Refining Market will grow from USD 16.78 Billion in 2025 to USD 21.45 Billion by 2031 at a 4.18% CAGR. The United States oil refining market consists of the industrial processing of crude petroleum into essential derivatives such as gasoline, diesel fuel, and petrochemical feedstocks. The primary driver sustaining this sector is the enduring demand for transportation fuels necessitated by an extensive national logistics network and high personal vehicle ownership. Furthermore, robust manufacturing and chemical production sectors require a consistent supply of refined distillates to maintain operational continuity. These fundamental economic requisites ensure a stable baseline of consumption that supports refinery throughput and incentivizes facility optimization even amidst fluctuating crude prices.

However, the industry faces a significant challenge arising from stringent environmental regulations and the associated compliance costs that can precipitate facility closures or capacity reductions. Operators must navigate a complex landscape of emission mandates that often require substantial capital investment and can compress profit margins to unsustainable levels. This pressure on infrastructure availability is reflected in recent capacity figures. According to the American Fuel & Petrochemical Manufacturers, in 2025, the United States possessed an operable atmospheric crude distillation capacity of 18.4 million barrels per calendar day. Such constraints highlight the ongoing difficulty refiners face in balancing regulatory adherence with the need to meet domestic energy requirements.

Key Market Drivers

The abundance of cost-competitive domestic shale crude feedstock serves as the primary catalyst for the United States oil refining market, providing operators with a reliable and economically advantageous input stream. The proliferation of hydraulic fracturing in key regions such as the Permian Basin has decoupled domestic refiners from the volatility of international crude markets, allowing them to maintain high throughput rates while optimizing margins. This surge in upstream availability ensures that facilities have consistent access to light sweet crude, which is more efficient to process into high-value distillates than heavier imported grades. Consequently, the industry has maintained robust output levels that reinforce the nation's energy independence. According to the U.S. Energy Information Administration, December 2025, in the 'Short-Term Energy Outlook', crude oil output in the country was predicted to reach an average of 13.61 million barrels per day in 2025.

Simultaneously, robust export demand for refined petroleum products is driving significant operational activity, as refiners increasingly pivot to serve international markets amidst stabilizing domestic consumption. The reconfiguration of global energy trade flows has created a structural vacuum that United States facilities are uniquely positioned to fill, particularly in Europe and Latin America. This external pull encourages refiners to maximize utilization rates to capture arbitrage opportunities and meet the soaring appetite for diesel, gasoline, and jet fuel abroad. This operational intensity is evident in recent performance metrics; according to EnergyNow, July 2025, U.S. utilization of refinery operable capacity rose to 95.5%, the highest level since June 2023. This export-oriented momentum has resulted in historic shipment volumes. According to Hellenic Shipping News, December 2025, exports of total petroleum products hit a record high of 7.77 million barrels per day in the week ended December 19.

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Key Market Challenges

The primary factor hampering the growth of the United States Oil Refining Market is the financial and operational pressure exerted by stringent environmental regulations and compliance costs. These mandates compel operators to divert substantial capital expenditures toward non-revenue-generating upgrades, such as advanced emission control systems, rather than investing in capacity expansion or efficiency improvements. For older facilities, the cost of retrofitting infrastructure to meet evolving federal and state standards often exceeds projected long-term profitability. Consequently, companies frequently elect to decommission these assets rather than incur the prohibitive expenses required to maintain regulatory adherence.

This trend of decommissioning directly reduces the nation's refining baseline and limits the industry's ability to scale operations. According to the American Fuel & Petrochemical Manufacturers, in 2025, the sector experienced a notable reduction in operable capacity of 263,776 barrels per calendar day following the shutdown of the LyondellBasell Houston Refining complex. Such closures illustrate how the high cost of compliance precipitates a contraction in infrastructure, effectively capping market growth and reducing the flexibility of domestic refiners to adjust to shifting energy demands.

Key Market Trends

The accelerated conversion of refineries into renewable fuel hubs is fundamentally restructuring the United States oil refining market. Operators are increasingly repurposing existing crude processing infrastructure to treat bio-based feedstocks such as used cooking oil and animal fats. This strategic pivot allows refiners to mitigate the financial risks associated with volatile hydrocarbon margins and stringent environmental mandates while capitalizing on the premium pricing of low-carbon derivatives like renewable diesel and sustainable aviation fuel. According to Phillips 66, June 2024, in a press release regarding the Rodeo Renewable Energy Complex, the facility achieved full commercial operations with a production capacity of 50,000 barrels per day of renewable diesel.

Simultaneously, the widespread implementation of Carbon Capture, Utilization, and Storage (CCUS) solutions is emerging as a critical mechanism for asset longevity. Refiners are integrating capture technologies directly into fluid catalytic crackers and hydrogen production units to sequester emissions, thereby reducing the carbon intensity of traditional petroleum products. This technological adoption is heavily incentivized by federal tax credits and the need to align heavy industrial operations with national net-zero targets. According to the Global CCS Institute, October 2024, in the '2024 Global Status of CCS Report', the United States led global development with 276 current projects in the carbon capture and storage pipeline.

Segmental Insights

The Middle Distillates segment is emerging as the fastest-growing category within the United States Oil Refining Market, driven by escalating demand across the industrial and heavy transportation sectors. This expansion is largely attributed to the reliance on diesel fuel for freight logistics and infrastructure development, alongside a significant recovery in jet fuel consumption for commercial aviation. Data from the U.S. Energy Information Administration indicates that sustained economic activity and manufacturing output are necessitating higher refinery throughputs for these fuels, thereby consolidating their dominant growth trajectory in the domestic energy landscape.

Regional Insights

The South dominates the United States oil refining market due to its extensive industrial infrastructure and strategic proximity to key crude oil supply sources. According to the U.S. Energy Information Administration, this region contains the highest concentration of refining capacity, particularly along the Gulf Coast. The area benefits from established pipeline networks that connect directly to major production basins, facilitating efficient transport and processing. Additionally, access to deepwater ports supports robust export activities, ensuring the South remains the central hub for the nation’s petroleum manufacturing and distribution operations.

Recent Developments

• In December 2024, Chevron U.S.A. Inc. completed a comprehensive retrofit of its refinery in Pasadena, Texas, designed to enhance the facility's processing capabilities. The project increased the refinery's capacity to process light crude oil by nearly 15 percent, reaching approximately 125,000 barrels per day, and added the flexibility to handle a wider range of equity crudes from the Permian Basin. This upgrade also enabled the facility to begin producing jet fuel and exporting gas oil, thereby optimizing the integration between the company's upstream assets and its Gulf Coast refining system to supply more refined products domestically.
• In October 2024, Valero Energy, through its Diamond Green Diesel joint venture, successfully completed a major sustainable aviation fuel (SAF) project at its Port Arthur, Texas, facility. The project, which was finalized ahead of schedule and under budget, provided the plant with the operational flexibility to upgrade approximately 50 percent of its annual renewable diesel production capacity into sustainable aviation fuel. This new product launch significantly expanded the company's low-carbon fuel portfolio, positioning the Port Arthur plant as one of the largest manufacturers of sustainable aviation fuel globally to serve the aviation industry's decarbonization needs.
• In September 2024, ExxonMobil announced a strategic collaboration with ADNOC, the state-owned oil company of the United Arab Emirates, involving a significant investment in a low-carbon hydrogen project in Texas. Under the agreement, ADNOC acquired a 35 percent equity stake in ExxonMobil’s proposed facility at its Baytown complex, which is designed to produce virtually carbon-free hydrogen and low-carbon ammonia. The partnership aims to leverage the Baytown refinery's integrated infrastructure and advanced carbon capture and storage capabilities to reduce greenhouse gas emissions across hard-to-abate industrial sectors while supporting the global energy transition.
• In April 2024, Phillips 66 achieved a significant operational milestone by commencing commercial production of renewable diesel at its Rodeo Renewable Energy Complex in California. This development marked a major step in the company's "Rodeo Renewed" project, which involved converting the facility from a crude oil refinery into one of the world's largest renewable fuels facilities. The converted complex began processing renewable feedstocks such as waste oils, fats, and greases, with production rates expected to ramp up to approximately 50,000 barrels per day. This launch underscores the refiner's strategic shift toward lower-carbon liquid fuels to meet growing market demand.

Key Market Players

• Exxon Mobil Corporation
• Chevron Corporation
• Phillips 66 Company
• Marathon Petroleum Corporation
• Valero Energy Corporation
• Royal Dutch Shell PLC
• BP America Inc.
• ConocoPhillips Company
• PBF Energy Inc.
• HollyFrontier Corporation

By Complexity Type	By Product Type	By Fuel Type	By Application	By Region
Topping Hydro-Skimming Conversion Deep Conversion	Light Distillates Middle Distillates Fuel Oil Others	Gasoline Gasoil Kerosene LPG Others	Transportation Aviation Marine Bunker Petrochemical Residential & Commercial Agriculture Electricity Rail & Domestic Waterways Others	Northeast Midwest South West

Report Scope:

In this report, the United States Oil Refining Market has been segmented into the following categories, in addition to the industry trends which have also been detailed below:

• United States Oil Refining Market, By Complexity Type:

• Topping
• Hydro-Skimming
• Conversion
• Deep Conversion

• United States Oil Refining Market, By Product Type:

• Light Distillates
• Middle Distillates
• Fuel Oil
• Others

• United States Oil Refining Market, By Fuel Type:

• Gasoline
• Gasoil
• Kerosene
• LPG
• Others

• United States Oil Refining Market, By Application:

• Transportation
• Aviation
• Marine Bunker
• Petrochemical
• Residential & Commercial
• Agriculture
• Electricity
• Rail & Domestic Waterways
• Others

• United States Oil Refining Market, By Region:

• Northeast
• Midwest
• South
• West