Vacuum Gas Oil Market Outlook (2025–2035)

Market Overview

The global Vacuum Gas Oil (VGO) market is projected to experience significant growth between 2025 and 2035, driven by increasing global energy demand, expanding petrochemical industries, and the need for efficient fuel production. Vacuum Gas Oil, a heavy hydrocarbon product obtained during the vacuum distillation process in oil refineries, serves as a critical feedstock for catalytic cracking and hydrocracking operations.

There are two primary types of VGO: Light Vacuum Gas Oil (LVGO) and Heavy Vacuum Gas Oil (HVGO). These types differ based on viscosity and boiling point, and are primarily used in the production of gasoline, diesel, jet fuel, and other valuable end products. VGO is processed in Fluid Catalytic Cracking (FCC) units and Hydrocrackers to maximize yield efficiency and product value.

With increasing global demand for transportation fuels and petrochemical feedstocks, the VGO market is becoming more integral to the operations of refineries and chemical plants. In 2025, the market is estimated to be worth $42.7 billion, with a projected value of over $65.3 billion by 2035, growing at a CAGR of 4.3% during the forecast period.

Key Market Trends

• Rising Global Fuel Consumption: As global economies recover and develop, particularly in Asia-Pacific and Latin America, the demand for gasoline and diesel continues to rise, directly fueling the need for VGO.
• Technological Advancements in Refining: Innovations in hydrocracking and FCC technology are increasing the efficiency and yield of valuable outputs from VGO, boosting refinery profitability.
• Growth of Petrochemical Sector: The increasing demand for ethylene, propylene, and aromatics in the plastics and chemical industries is supporting the demand for VGO as a petrochemical feedstock.
• Regional Shift in Refining Capacities: The construction of large-scale refineries in the Middle East, Asia-Pacific, and Africa is redistributing VGO demand and supply.
• Stringent Environmental Regulations: Regulatory pressures are compelling refiners to upgrade their processes to reduce sulfur content and greenhouse gas emissions, indirectly influencing VGO quality and usage.
• Sustainability and Bio-refinery Integration: The integration of renewable feedstocks into traditional refineries is emerging, impacting the future dynamics of VGO demand.

Competitive Landscape

The Vacuum Gas Oil market features a blend of international oil companies, national oil corporations, and independent refiners. Major players include:

•          TAIF-NK
•         Kuwait Petroleum Corporation
•          Exxon Mobil Corporation
•          KazMunayGas
•          Axeon Specialty Products
•         U.S. Oil & Refining Co.
•          Royal Dutch Shell
•          Zhejiang Petrochemical Corporation
•         Neste
•          Solis Oil
•          Vertex Energy Inc.
•          LUKOIL
•          Others

Product or Service Analysis

The Vacuum Gas Oil market includes:

• Light Vacuum Gas Oil (LVGO): Lower boiling range, used primarily in catalytic cracking units to produce high-octane gasoline.
• Heavy Vacuum Gas Oil (HVGO): Higher boiling range, suitable for hydrocracking units to produce diesel, jet fuel, and lube oils.

Key services related to VGO include:

• Transportation and Storage: Specialized logistics to handle and store heavy oil fractions.
• VGO Blending Services: Tailored blending to meet feedstock quality for downstream applications.

Catalytic cracking remains the dominant conversion process, but hydrocracking is gaining ground due to its ability to produce cleaner fuels and higher conversion rates. The rise in hybrid processing units combining FCC and hydrocracking is boosting flexibility in product yields from VGO.

Market Segmentation

• By Type:
• Light Vacuum Gas Oil (LVGO)
• Heavy Vacuum Gas Oil (HVGO)
• By Processing Unit:
• Fluid Catalytic Cracking (FCC)
• Hydrocracking
• Coking
• By Application:
• Gasoline
• Diesel
• Jet Fuel
• Lubricants
• Petrochemicals
• By End-User Industry:
• Oil & Gas
• Transportation
• Petrochemical
• Aviation
• Marine
• By Region:
• North America
• Europe
• Asia-Pacific
• Latin America
• Middle East & Africa

Asia-Pacific leads in market share due to refining capacity expansions in China and India. North America follows with a mature but high-output refining infrastructure.

Pricing Trends

• Historical Pricing (2015–2024):
• VGO prices closely track crude oil trends but are also influenced by refinery demand and capacity utilization.
• Prices fluctuated between $400–$650 per metric ton over the past decade.
• Current Pricing (2025):
• Average global VGO price: $580 per metric ton.
• LVGO tends to command a slight premium due to its higher yield of gasoline.
• Projected Trends (2025–2035):
• Prices are expected to rise gradually, reaching $700–$800 per metric ton by 2035, driven by refined fuel demand and tighter sulfur regulations.
• Supply chain volatility, shipping costs, and geopolitical factors will play a role in pricing variability.

Innovations and Developments

• Advanced Hydroprocessing Units: Modern hydrocrackers with dual catalyst beds improve conversion efficiency and product flexibility.
• AI and Automation in Refineries: Smart sensors and AI-driven monitoring systems optimize VGO yield and unit operation.
• Carbon Capture and Utilization (CCU): Integration of CCU technologies in refinery operations to lower carbon footprint.
• Desulfurization Technologies: Improved methods to lower sulfur content in VGO enhance compliance and marketability.
• Co-processing Bio-oils: Trials on blending renewable oils with VGO for partially sustainable outputs are underway.

These developments aim to enhance yield, meet environmental compliance, and reduce operational costs while maximizing value from each barrel processed.

Sustainability and Environmental Impact

While VGO is a fossil-based product, sustainability practices are increasingly being applied across the value chain:

• Emission Reductions: Upgraded cracking units reduce NOx and SOx emissions.
• Energy Efficiency: Heat recovery systems and process integration reduce energy consumption.
• Desulfurization: Critical for cleaner combustion products, especially diesel.
• Circular Economy Practices: Some refiners are exploring waste-to-energy conversions alongside VGO processing.
• Regulatory Compliance: Adherence to IMO 2020, Euro VI standards, and regional air quality regulations impact VGO refining and distribution.

The shift towards lower-sulfur fuels and environmentally-friendly refining will transform how VGO is processed and valued in global markets.

Case Studies and Data

Case Study: ExxonMobil Baytown Refinery (U.S.)

• Implemented a hydrocracking upgrade that increased VGO throughput by 30%.
• Achieved a 15% improvement in diesel yield and a 10% reduction in emissions.

Case Study: Indian Oil Corporation (India)

• Commissioned an advanced FCC unit with integrated VGO pre-treatment.
• Increased octane value of gasoline by 12%, improving profitability.

Data Highlights:

• Market Value in 2025: $42.7 billion
• Estimated Value by 2035: $65.3 billion
• CAGR (2025–2035): 4.3%
• Top Consuming Region: Asia-Pacific (38%)
• Major Application: Diesel production (40% of VGO output)

Conclusion and Future Outlook

The Vacuum Gas Oil market is poised for steady growth through 2035, fueled by rising demand for transportation fuels and petrochemical feedstocks. While VGO remains a cornerstone of fossil-based energy systems, the industry is adapting through cleaner technologies and integration with sustainable practices.

Future Opportunities Include:

• Development of bio-VGO alternatives or VGO/bio-oil co-processing.
• Expanding into emerging markets with new refineries and hybrid plants.
• Digital transformation to enhance operational efficiency and yield.
• Participation in carbon trading markets through emission-reducing technologies.

As the world moves toward decarbonization, VGO will remain relevant by aligning with cleaner, smarter, and more flexible refining ecosystems.