Iran war strains global refining

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 removed roughly 5 million barrels per day of global refining output in Q2, with refinery runs averaging around 78 million bpd, the lowest since 2020. Russian refining has been battered by Ukrainian drone attacks, forcing Moscow to ban diesel exports. China has sharply reduced refinery runs and halted fuel exports. The U.S. emerged 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 levels, with the U.S. 3-2-1 crack spread near $70 per barrel and European diesel margins around $65. Major oil companies ExxonMobil, Chevron, BP, Shell, and TotalEnergies have reported strong downstream profits, but warn that tight supplies and high prices will persist. The Strait of Hormuz remains uncertain, with renewed hostilities between the U.S. and Iran choking off exports. Global fuel stocks are worryingly thin, leaving the global economy exposed to potential demand destruction.