Vacuum Gas Oil Market Size, Share, Analysis, Trends, Growth, 2032

Vacuum Gas Oil Industry Prospective:

The global vacuum gas oil market size was worth around USD 75.47 billion in 2023 and is predicted to grow to around USD 667.24 billion by 2032 with a compound annual growth rate (CAGR) of roughly 27.40% between 2024 and 2032.

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Vacuum Gas Oil Market: Overview

Vacuum gas oil (VGO), also simply referred to as gas oil, is a leading sector of the fossil fuel industry. It is a byproduct that originates during the refining process of crude oil. In its elemental form, VGO is a complex unit consisting of hydrocarbons. Over the course, vacuum gas oil has found several applications across industries. One of the most essential applications of vacuum gas oil is its role as a feedstock in catalytic cracking units. It is used for producing lighter fuels such as diesel and gasoline. Its unique properties such as low sulfur content and high boiling point allow VGO to become an ideal candidate or component for mixing with other refined products, especially in industries with strict fuel-related specifications. Vacuum gas oil is produced when crude oil undergoes the refining process at a refinery.

The concept behind the growing popularity of VGO is related to the length of the hydrocarbon chains. For instance, studies indicate that small hydrocarbon chains have lower boiling points and they produce more desired products such as diesel, kerosene, gasoline, and propane. During the refining process, crude passes through a cracking unit, and hydrocarbon chains are broken down into smaller units thus making them more desirable for producing popular end-products. During the forecast period, the vacuum gas oil industry is expected to generate extensive demand for VGO due to the growing need for higher fuel efficiency.

Key Insights:

• As per the analysis shared by our research analyst, the global vacuum gas oil market is estimated to grow annually at a CAGR of around 27.40% over the forecast period (2024-2032)
• In terms of revenue, the global vacuum gas oil market size was valued at around USD 75.47 billion in 2023 and is projected to reach USD 667.24 billion, by 2032.
• The vacuum gas oil market is projected to grow at a significant rate due to the growing demand for achieving energy efficiency
• Based on the application, the gasoline production segment is growing at a high rate and will continue to dominate the global market as per industry projection
• Based on the product, the light vacuum gas oil (LVGO) segment is anticipated to command the largest market share
• Based on region, North America is projected to dominate the global market during the forecast period

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Vacuum Gas Oil Market: Growth Drivers

Rising demand for diesel and gasoline to act as a primary market growth driver

The global vacuum gas oil market is expected to witness high growth during the projection period due to the growing demand for lighter hydrocarbon derivatives such as diesel and gasoline. The modern highly industrialized world relies heavily on petroleum items. For instance, diesel is used for powering several types of light-weight and heavy-duty vehicles. It is used for powering on-road automotives including buses, trucks, and cars. Furthermore, diesel is also essential for the smooth running of locomotives and other automotives used in the growing railroad industry. Some of the other essential uses of diesel are observed in the aviation sector where the oil is used for powering aircraft.

The leading sectors with high demand for diesel include construction, mining, and agriculture. On the other hand, gasoline is equally important in the automobile sector where the oil is used for providing energy to vehicle engines. The rising sale of internal combustion engine-powered automotives in emerging economies, as well as developed nations, is expected to fuel more investments in the production of vacuum gas oil. Vehicles powered by gasoline and diesel are relatively less priced as compared to electric vehicles (EVs). Moreover, the infrastructure around non-electric vehicles is more advanced with the greater availability of gasoline and diesel providing facilities and the abundance of repair facilities for automotives equipped with internal combustion engines.

Growing demand for achieving energy efficiency will contribute to the industry’s growth rate

Oil consumption globally has peaked at unprecedented levels in the last decade. The excessive increase in the energy consumption rate is a result of multiple factors. However, traditional energy resources are dwindling at a rapid rate leading to governments across the globe and environment agencies urging to improve energy efficiency which is expected to work in the favor of the global vacuum oil gas market.

Vacuum Gas Oil Market: Restraints

Severe environmental impact of VGO production could limit the market’s expansion rate

The global industry for vacuum gas oil is projected to be restricted due to the high environmental impact of VGO production. Refining vacuum gas oil has more serious environmental repercussions as compared to other fossil fuels since VGO is also a byproduct of shale oil that originates from fracking. VGO processing is a resource-intensive activity since it requires a large volume of water. Furthermore, it also necessitates the use of extremely harsh chemicals that can penetrate into the environment by leaking into water reserves. In addition to this, the byproduct of the fracking process is the release of methane gas that can further escape into drinking water leading to severe health hazards to nearby communities.

Vacuum Gas Oil Market: Opportunities

Increase in investments toward optimizing the VGO process and development of extensive end products may generate excellent growth opportunities

The global vacuum gas oil market is expected to generate extensive growth opportunities in the coming years. The rise in investments toward optimizing the vacuum gas oil production process along with a growing focus on the development of more end-products with higher applications will drive the demand in the VGO industry. For instance, Honeywell has developed VGO Unionfining™ and Unicracking™ processes. These procedures are cost-effective, especially in upgrading VGO into more valuable and high-application products. Honeywell promotes solutions to allow clients access to a wide range of gasoline/diesel rations without compromising on the product specifications. In addition to this, VGO producers are likely to experiment with process optimization technologies by installing automated process control systems for improved response further helping the market players deliver better products to the clients.

Growth in the development of new oil & gas refineries and upgrades in existing infrastructure poses several expansion avenues for the industry players

VGO demand will be impacted by the growth in the development of new oil & gas refineries since these facilities require extensive quantities of vacuum gas oil as a feedstock for producing other essential petrochemical products. In April 2024, Exxon, a leading market player, announced the expansion of its UK refinery. Through the new facility, the company intends to start supplying its first diesel as early as 2025. Moreover, the rising number of upgrades in existing refinery infrastructure will also create more demand in the global vacuum gas oil industry.

Vacuum Gas Oil Market: Challenges

Growing focus on renewable energy could challenge the market expansion rate

The global industry for vacuum gas oil is expected to be challenged by the rising focus and demand for renewable energy. The changing weather conditions and rising global warming index have led to an increased demand for the development of novel energy sources that do not have a drastic impact on the environment thus limiting the growth avenues for VGO in the coming years.

Vacuum Gas Oil Market: Segmentation

The global vacuum gas oil market is segmented based on application, sulfur content, product, and region.

Based on the application, the global market divisions are diesel oil production and gasoline production. In 2023, the highest growth was observed in the gasoline production segment due to greater demand for gasoline-based products across major economies. Moreover, gasoline is an essential material required for the running of the global automotive industry. Diesel oil production is growing rapidly due to the changing prices of gas. In 2022, more than 1.7 billion barrels of diesel were produced by US refineries as per official reports.

Based on sulfur content, the global vacuum gas oil industry is segmented into high-sulfur vacuum gas oil and low-sulfur vacuum gas oil.

Based on the product, the global market divisions are heavy vacuum gas oil (HVGO) and light vacuum gas oil (LVGO). In 2023, the most dominant segment of light vacuum gas oil (LVGO) was due to the application of the oil in growing industries. LVGO is preferred during the gasoline production process. Moreover, it is also used for producing other feedstock used in the petrochemical industry. LVGO density is between 0.85 to 0.90 grams per cubic centimeter when maintained at 15°C.

Vacuum Gas Oil Market: Report Scope

Vacuum Gas Oil Market: Regional Analysis

North America may generate a high growth rate during the projection period

The global vacuum gas oil market is expected to be led by North America during the projection period. The growing consumption of diesel in the regional automotives sectors of the US and Canada may contribute to North America’s dominance. Electric vehicles (EVs), although popular in North America, only contribute to 1% of all vehicles in the American market. The majority of automotives are gasoline-driven. In addition to this, the US has heavy stakes in the global oil & gas industry housing several robust oil refineries. In March 2023, reports emerged suggesting that the new plant construction by Exxon in Beaumont, US will become the largest US refinery once it starts operating at 100%. The regional market will be further impacted by the intensifying regulations surrounding diesel/gasoline proportion in petrochemical products.

Asia-Pacific is anticipated to deliver exceptional results during the projection period. China, India, and Russia will be the essential regional market drivers. The growing construction of new facilities for diesel and gas production along with investments by Asian countries in crude oil production and refining sector will attract more revenue.

Vacuum Gas Oil Market: Competitive Analysis

The global vacuum gas oil market is led by players like:

• Rosneft
• TotalEnergies
• LUKOIL
• BP (British Petroleum)
• Gazprom Neft
• Indian Oil Corporation Limited
• ExxonMobil
• Reliance Industries Limited
• Royal Dutch Shell
• Marathon Petroleum Corporation
• Chevron Corporation
• Valero Energy Corporation
• Saudi Aramco
• Phillips 66
• PetroChina

The global vacuum gas oil market is segmented as follows:

By Application

• Diesel Oil Production
• Gasoline Production

By Sulfur Content

• High Sulfur Vacuum Gas Oil
• Low Sulfur Vacuum gas Oil

By Product

• Heavy Vacuum Gas Oil (HVGO)
• Light Vacuum Gas Oil (LVGO)

By Region

• North America
  • The U.S.
  • Canada
• Europe
  • France 
  • The UK
  • Spain
  • Germany
  • Italy
  • Rest of Europe
• Asia Pacific
  • China
  • Japan
  • India
  • South Korea
  • Southeast Asia
  • Rest of Asia Pacific
• Latin America
  • Brazil
  • Mexico
  • Rest of Latin America
• Middle East & Africa
  • GCC
  • South Africa
  • Rest of Middle East & Africa