As Middle Eastern states like Oman and Bahrain expand refining capacity and begin consuming more regional crude oil to produce fuels like diesel for export, global oil supplies are set to tighten even further.

According to sources familiar with the matter, Omar and Kuwait’s joint venture with the new Duqm refinery has now begun exporting cargoes of refined products for the first time. Traders forecast that, by the beginning of next year the 230,000 barrel per day refinery will be running at full capacity.

In Bahrain, the Sitra refinery is also being expanded, with the 87-year old crude processing plant’s capacity growing to roughly 400,000 barrels per day, from its present output of 267,000 per day now. According to individuals with knowledge of the plant’s operations, the expansion will include upgrades to units which will be capable of producing jet fuel and diesel fuels which will meet European specifications. According to the sources, the expansion will be complete by the end of 2024.

Neither facility’s operators would respond to requests for comment.

Between the two refineries, the supply of Middle Eastern crude will be tightened by over 300,000 barrels per day, as OPEC+ producers are already restricting flows to the global markets to support prices. The crude used by those refiners would normally have headed to refiners in Asia. Now the additional diesel supplies will most likely head primarily to Europe.

Since Saudi Arabia and Russia implemented voluntary cuts to production and exports in June, in addition to quotas already in effect among the Organization of Petroleum Exporting Countries and allied producers, oil in London has surged over 20% to more than $90 a barrel.

Refiners in Asia have maintained margins high as buyers compete for barrels from the Middle East of crude types which will be the most efficiently processed by their plants.

As all of this has been going on, in Kuwait, the new Al Zour refinery on the Persian Gulf, a facility which will process 615,000 barrels per day is being brought online this year. As a result crude flows out of Kuwait heading to Asia have been lagging. In addition, Kuwait is also supplying crude to the Duqm refinery.

The island nation of Bahrain does not export any crude, with most of the supply the nation utilizes arriving from Saudi Arabia.