US to get first oil refinery in 50 years: What it means for world's biggest oil producer

The United States is getting its first oil refinery in decades.

US President Donald Trump announced that a new oil refinery will be opening in Texas’s Brownsville.

“I am proud to announce that America First Refining is opening the FIRST new US Oil Refinery in 50 YEARS in Brownsville, Texas,” Trump wrote on social media.

The development came amid rising concerns about the increasing price of energy and gas in the backdrop of the Iran war, which began on February 28. Earlier this week, the price of crude oil crossed $100 per barrel.

But what do we know about the refinery? And what do we know about US oil production?

Let’s take a closer look.

What we know about the refinery

Trump has claimed the deal is estimated at $300 billion (Rs. 27.60 lakh crore). As per Bloomberg, the project is being put together by Element Fuels, an energy firm headquartered in Houston, Texas. The company had in June 2024 announced that it had finished preparing the site and obtained the permits needed to construct the plant.

It said that the refinery would be able to process around 160,000 barrels of oil daily. The company’s website now redirects to the website for America First Refining, the company Trump said will open the new refinery.

More from Explainers

US container imports fell 6.5% in February but remain fourth-highest on record: Descartes What is the 'doomsday missile'? US tests Minuteman III amid Iran war tensions

The company has said it will break ground on the new facility in the second quarter of 2026. In a statement, it said it has signed a two-decade-long agreement to sell fuel with Reliance Industries. The Brownsville refinery will be designed to run entirely on US shale oil, a statement by the firm added.

Trump seems to be pegging the value of the deal according to the value of crude oil that will be processed and produced over two decades. America First Refining said it will buy 1.2 billion barrels of US light shale oil at an estimated value of $125 billion (Rs. 11.50 lakh crore). It will also produce 50 billion gallons of refined products worth $175 billion (Rs. 16.10 lakh crore). “The US trade imbalance will improve by $300 billion (Rs. 27.60 lakh crore),” America First Refining said in a statement.

Editor’s Picks

1

Iran war: Can Trump really take over Strait of Hormuz as he threatened? 2

In Graphics | How Donald Trump's second term has witnessed strikes and threats galore

As per Indian Express, the United States has not built a major refinery since 1976. The Marathon Refinery was constructed at a time when oil cost less than $5 (Rs 459) a barrel.

Australia-based analyst Shanaka Perera told the newspaper that Trump is making the move because America has been left relying on foreign refineries.

“The Strait of Hormuz did not just close oil transit. It closed the refined product supply chain that feeds American gasoline, diesel, jet fuel, and petrochemicals. Building domestic refining capacity is the structural response to actuarial warfare: if chokepoints can be closed by insurance spreadsheets, the only defence is not needing the chokepoint,” Perera said.

According to Bloomberg, previous plans to build such refineries have fallen by the wayside. In the 2000s, a $2.5 billion (Rs. 22,997.5 crore) plan from Arizona Clean Fuels Yuma to build a new facility to process Mexican or Canadian crude near Phoenix fell apart due to a lack of financial backing.

A look at US oil production and exports

According to data from International Energy Statistics, the US is the world’s biggest producer of crude oil. It is followed by Russia and Saudi Arabia.

Production of crude oil peaked at 9.6 million bpd in 1970 before plateauing and declining in the 1990s and 2000s. In 2008, America’s oil production hit a record low of 5.0 million bpd. However, oil production began taking off in 2009 with the advent of hydraulic fracturing and horizontal drilling techniques.

The US has been the world’s largest producer of oil for the past seven straight years. Much of the increase in crude oil and natural gas production has been powered by the Permian Basin in western Texas and eastern New Mexico.

According to The Conversation, the US in 2026 has exported over six million barrels of refined products and over four million barrels of crude oil every single day. Though over 30 states produce oil and gas, most of it comes from Texas, New Mexico, North Dakota, Alaska, Oklahoma and Colorado.

The Energy Information Administration, in its report this week, has predicted that the US will increase its output to 13.83 million bpd by 2027, an increase of 220,000 bpd daily.

The United States produced 12.9 million barrels per day (bpd) in 2023. This broke its own previous record set in 2019 of 12.3 million bpd. Average monthly production of crude oil hit a high of 13.3 million bpd in December 2023. Prior to that, America had hit a high of 13.1 million bpd in early 2020 under Trump.

In 2023, the United States exported about 10.15 million bpd of petroleum to 173 countries as well as the US territories of American Samoa, Puerto Rico and the US Virgin Islands.

Petroleum crude oil exports, around 4.06 million bpd, comprised around 40 per cent of the country’s total gross petroleum exports.

The top five nations to which the US exported petrol by volume in 2023 were:

• Mexico (1.17 million bpd)

• China (0.98 million bpd)

• The Netherlands (0.86 million bpd)

• Canada (0.80 million bpd)

• Japan (0.62 million bpd)

However, interestingly, US crude oil exports actually decreased by three per cent in 2025 from 2024 – the first such annual decrease since 2021, the US Energy Information Administration said on Tuesday.

The US exported 4.0 million barrels per day of crude oil in 2025, 85 times as much as in 2011, but slightly less than in 2023 and 2024, according to the EIA.

The EIA also noted that US exports decreased to Europe and the Asia and Oceania region, the two top regional destinations for US crude oil. It added that exports to Europe decreased by 7 per cent, likely because increased output from OPEC replaced volumes from the US, while exports declined by 75 per cent to Singapore and 89 per cent to China.

Since the early 2010s, US exports of crude oil have increased sharply, driven by increasing US production, expanding domestic infrastructure, increasing global demand for light, low-sulphur crude oils, and the removal of crude oil export restrictions in 2015, the EIA said.

FAQs

1) How big is the deal?
Donald Trump has claimed that the deal is valued at $300 billion (Rs. 27.60 lakh crore).

2) Why is the US doing this?
The development comes amid rising concerns about the increasing price of energy and gas in the backdrop of the Iran war, which began on February 28.

3) How much oil will the refinery process?
The company says the refinery will be able to process around 160,000 barrels of oil every day.

4) Who is the world’s biggest producer of crude oil?
The United States is the world’s largest producer of crude oil. It is followed by Russia and Saudi Arabia.

With inputs from agencies

Disclaimer: Firstpost is part of the Network18 group. Network18 is controlled by Independent Media Trust, of which Reliance Industries is the sole beneficiary.