Iran war strains global refining
Analysis based on 20 articles · First reported Mar 08, 2026 · Last updated Aug 04, 2026
Refined product shortages and record refining margins are boosting profits for oil majors but raising fuel prices for consumers and businesses, contributing to inflationary pressures. The prolonged disruption threatens global economic activity as fuel inventories run thin and the US, the last-resort supplier, faces constraints.
The Iran war, which began on February 28, 2026, has severely disrupted global oil refining. The closure of the Strait of Hormuz and Iranian attacks on Middle Eastern refineries have taken major capacity offline in Saudi Arabia, Bahrain, Kuwait, and the UAE. China has cut refinery runs and halted fuel exports, while Ukrainian drone strikes have battered Russian refining, forcing Moscow to curb diesel exports. These disruptions removed about 5 million barrels per day of global refining output in Q2, with runs averaging 78 million bpd, the lowest since 2020. Refining margins have surged to record highs, with the US 3-2-1 crack spread near $70 a barrel and European diesel margins around $65. The US has become the world's refinery of last resort, but its inventories have fallen to multi-year lows and exports are retreating. A temporary reopening of Hormuz after the June 17 ceasefire eased crude flows, but renewed hostilities have again choked off regional exports. Major oil companies ExxonMobil, Chevron, Shell, and TotalEnergies reported record refining profits, but warn that tight fuel supplies and high prices will persist. Analysts expect the refining boom to last several years but warn it is driven by war and scarcity, not structural improvement.
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