Iran war strains global refining
Analysis based on 27 articles · First reported Mar 08, 2026 · Last updated Aug 19, 2026
The refining supply crunch is driving record refining margins and elevated fuel prices, benefiting integrated oil majors but straining consumers and the broader economy. Persistent tightness in diesel and gasoline markets is likely to keep energy prices high, contributing to inflationary pressures and political challenges for the US administration.
The Iran war, which began on February 28, 2026, has caused severe disruptions to global refining and fuel supply chains. The closure of the Strait of Hormuz and attacks on Middle Eastern refineries have taken offline major facilities in Saudi Arabia, Bahrain, Kuwait, and the UAE. China has reduced refinery runs, and Russia's refining sector has been battered by Ukrainian drone attacks, leading to a diesel export ban. These disruptions removed roughly 5 million barrels per day of global refining output in Q2, with refinery runs averaging 78 million bpd, the lowest since 2020. The temporary reopening of Hormuz after the US-Iran ceasefire on June 17 eased pressure briefly, but renewed hostilities have again choked off exports. The US has acted as the world's refinery of last resort, but its inventories have fallen to multi-year lows and exports are retreating. Refining margins have surged to record highs, with the US 3-2-1 crack spread near $70 per barrel and European diesel margins at record levels. Major oil companies like ExxonMobil, Chevron, BP, Shell, and TotalEnergies have reported record refining profits, but warn that high fuel prices will persist. The global economy remains exposed as fuel stocks run thin and recovery of refinery output will take months or years.
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