Vacuum Gas Oil Market Outlook

According to the report by Expert Market Research (EMR), the global vacuum gas oil (VGO) market attained a value of USD 406.80 billion in 2024. Supported by the rising global demand for transportation fuels, technological advancements in refining operations, and the increasing need for high-quality fuel products, the market is projected to grow at a CAGR of 5.30% during 2025–2034 to reach approximately USD 681.81 billion by 2034.

Vacuum gas oil (VGO) is a heavy petroleum fraction derived during the vacuum distillation of crude oil. Owing to its high hydrocarbon content, VGO plays an essential role as a feedstock in fluid catalytic cracking (FCC) units and hydrocrackers, which convert heavier fractions into high-value products, such as gasoline, diesel, kerosene, and other middle distillates. The continued expansion of the global transportation and petrochemical industries has cemented VGO’s importance as a core component of modern refining processes.

The vacuum gas oil market outlook is further strengthened by the ongoing demand for energy-dense fuels, rising industrial operations, and efforts by refiners to optimise production efficiencies. In addition, the trend toward upgrading heavier crude oils and residuum has increased the reliance on VGO as a crucial intermediate in advanced refining and conversion technologies.

Vacuum Gas Oil Market Size and Share

The global vacuum gas oil market reached USD 406.80 billion in 2024, indicating its substantial role in the global energy and refining value chain. North America and the Asia Pacific region together dominate the market share due to their large-scale refining capacities, growing industrialisation, and expanding transportation sectors. The United States, in particular, holds a prominent share owing to its well-developed refining infrastructure and significant production of gasoline and middle distillates.

Asia Pacific is expected to remain the fastest-growing market segment, fueled by rising fuel consumption in China, India, and Southeast Asia. The region’s expanding petrochemical industry and increasing investments in large-scale refinery expansion projects further support VGO demand. Europe also accounts for a considerable share driven by stringent environmental regulations and ongoing refinery upgrades aimed at producing ultra-low sulfur diesel (ULSD) and other cleaner fuels.

On the other hand, the Middle East and Africa continue to build capacity with large integrated refinery-petrochemical complexes, further strengthening the region’s market position.

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Vacuum Gas Oil Market Trends

Numerous trends are shaping the global vacuum gas oil market:

1. Increasing Adoption of Hydrocracking Technologies
Hydrocracking units convert heavy gas oils into cleaner and lighter fuel fractions, including kerosene, diesel, and jet fuel. This trend is gaining momentum as countries strive to meet stringent fuel quality standards.

2. Transition Toward Cleaner Fuels
Global efforts to reduce emissions have accelerated demand for low-sulfur, high-quality fuels. With VGO being a key feedstock in the production of low-sulfur diesel and gasoline, this transition is significantly boosting market growth.

3. Growth in the Petrochemical Sector
VGO is increasingly being used as a feedstock to produce petrochemical building blocks such as ethylene, propylene, and aromatics. The global rise in plastics, resins, and synthetic materials supports this growing trend.

4. Refinery Capacity Expansion in Emerging Economies
Major investments in new refinery infrastructure in Asia, the Middle East, and Africa are creating significant opportunities for VGO utilization, particularly in integrated refinery-petrochemical complexes.

5. Rising Use of Heavy and Extra-Heavy Crude Oils
With refiners increasingly processing heavier crude grades, the production and utilisation of VGO are expected to grow further, supporting demand for advanced conversion technologies.

Drivers of Growth

Several key factors are driving the expansion of the global vacuum gas oil market:

1. Rising Global Fuel Consumption
The global demand for transportation fuels—including gasoline, diesel, and jet fuel—continues to rise due to increasing urbanisation, population growth, and economic development, especially in emerging regions. As VGO is a crucial feedstock in producing these fuels, demand is expected to remain consistently strong.

2. Technological Innovations in Refining
Advanced refining technologies such as hydrocracking, FCC, and coking have enhanced the efficiency of converting VGO into lighter and more valuable products. These advancements reduce waste, improve yields, and boost profitability.

3. Expansion of Petrochemical Production
VGO contributes significantly to producing petrochemical feedstocks required across industries such as packaging, automotive, construction, and consumer goods. The global expansion of petrochemical facilities continues to drive VGO demand.

4. Growing Emphasis on Low-Sulfur Fuel Production
With regulatory bodies across the globe mandating lower sulfur content in fuels, refineries are investing in VGO upgrading technologies. This ensures compliance with environmental standards while meeting consumer needs for cleaner fuel.

5. Increasing Market for Heavy Oil Upgrading
The shift toward using heavier crude feeds requires enhanced refining processes. VGO serves as a vital intermediate in upgrading heavy fractions into lighter and more marketable fuels.

Vacuum Gas Oil Market Segmentation

The market can be divided based on type, sulphur content, distribution channel and region.

Competitive Landscape

Some of the major players explored in the report by Expert Market Research are as follows:

• LUKOIL
• Kuwait Petroleum Corporation
• Honeywell International Inc
• Vertex Refining
• Husky Energy Inc.
• TAIF-NK
• KazMunayGas
• Axeon Specialty Products
• Neste
• Gazprom Neft
• Zhejiang Petrochemical Corporation
• S. Oil & Refining Co.
• Others

Challenges and Opportunities

Challenges

• Environmental concerns and emission regulations restrict the production of high-sulfur fuels, requiring costly refinery upgrades.

• Fluctuating crude oil prices can impact refinery margins and feedstock availability.

• Shift toward renewable and alternative energy sources poses long-term challenges to fossil fuel demand.

• High capital investment for building or upgrading FCC and hydrocracking units limits adoption among smaller refiners.

• Geopolitical instability in major oil-producing regions can disrupt VGO supply chains.

Opportunities

• Refinery modernisation initiatives in developing nations offer strong growth potential for VGO utilisation.

• Increasing demand for petrochemical feedstocks will boost VGO cracking requirements.

• Technological advancements in converting heavy oils into cleaner fuels create opportunities for market expansion.

• Growing adoption of cleaner fuel standards encourages greater use of hydrocracking processes using VGO.

• Strategic integration of refineries with petrochemical complexes is increasing VGO conversion rates into high-value chemicals.

Vacuum Gas Oil Market Forecast (2025–2034)

Looking ahead, the global vacuum gas oil market is anticipated to witness sustained growth during the forecast period. Increasing energy demand, expanding global trade, and advancements in refining technologies will continue to drive market expansion. The shift toward high-value fuel production, combined with the rise of integrated refinery-petrochemical complexes, is expected to boost VGO utilisation significantly.

By 2034, the market is projected to reach USD 681.81 billion, driven by rising demand for cleaner fuels, expanding petrochemical manufacturing, and ongoing modernisation of refining facilities across the world. Emerging economies in Asia, Latin America, and the Middle East will play a central role in this growth, supported by increasing industrialisation and strategic investments in refining capacity enhancement.

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