UK DATA: Grangemouth refinery closure triggers largest stock build in three years

The UK had its largest oil products stock build in over three years in the first quarter of 2025, according to government data, as its shrinking refining sector has sparked more stockpiling to cover potential supply disruptions.

Figures from the UK's Department for Energy Security & Net Zero published June 26 show that the UK added some 280,000 mt of oil to its inventories in the first three months of the year, reversing four consecutive quarters of stock draws.

Previously, the largest inventory gain was in the first quarter of 2022, when reserves grew by 504,000 mt.

The boost in inventories came as Petroineos shuttered its Grangemouth refinery in Scotland this April, removing some 150,000 b/d from UK refining capacity and a key source of its fuel.

As a member of the International Energy Agency, the UK is committed to holding crude and fuel stocks equivalent to 90 days of its net imports, mandating a stock build when refineries close.

However the UK has remained above the 90-day requirement and held 127 days worth of its net import demand in March, according to the latest available IEA data.

In March 2024, the country had a larger cushion of 152 days worth of net imports in storage. However as the Grangemouth closure has increased the outright volumes of net imports needed to supply the market, stock volumes grew year over year.

According to the government data, UK oil inventories stood at 10.8 million mt in the first quarter of 2025, roughly 6% higher than the previous year.

As Grangemouth wound down its operations, UK refining output dropped by 7% and sunk from 13.5 million mt in the final quarter of 2024 to around 12 million mt in Q1 2025.

Output declines were visible across all three major fuels, jet fuel, petrol and diesel, which contracted by 15%, 13% and 7.6%, respectively.

As the only refinery in the UK with a hydrocracker, a unit specifically geared towards maximizing middle distillate yields, the Grangemouth refinery is estimated to have supplied roughly 15% of the UK's diesel at its height.

Trade balances rapidly adjusted to the loss of capacity at home. The country's oil product deficit grew by around 800,000 mt in Q1 relative to 2024 levels, causing imports to jump by roughly 4%.

According to S&P Global Commodities at Sea data, Kuwait was the UK's main oil product supplier during the quarter, sending some 130,000 b/d and making up a quarter of all imports. The US accounted for a 16% share, followed by the Netherlands with 12%.

The trade rebalance was exacerbated by a major turnaround at the UK's 217,000 b/d Stanlow refinery, which took the entire complex offline from late January to May.

However moving forward, the Cheshire-based refinery hopes to capture more of the domestic market. The $130 million upgrade grew the site's capacity from 198,000 b/d to 217,000 b/d when it returned to operations late last month.

At the Fawley refinery on the South Coast, owner ExxonMobil is also investing in capacity expansions and plans to grow the plant's low-sulfur diesel capacity by 40% this year.

The project is expected to complete in 2025, and is intended to better conserve consumption habits that are tilted towards diesel.

According to the latest government data, diesel made up around 40% of total fuel demand in the UK in the reporting period, and consumption grew by 1.5%.

S&P Global Commodity Insights analysts estimate that UK diesel/gasoil consumption peaked at around 670,000 b/d in 2018 and tipped into structural decline in 2022 as petrol vehicles dominated new car sales.

However, diesel use for heavy goods vehicles and buses have kept the fuel a staple of the country's energy mix, leaving space for domestic refiners to plug near-term supply gaps.