Middle East War Triggers New Global Refining Boom
For the second time this decade, a war has upended global oil markets and sent oil prices and refining margins to multi-year highs, benefitting the world’s biggest oil companies and top refiners. The war in Iran has tightened fuel supply as crude oil has struggled to move through the Strait of Hormuz, triggering reduced refining throughput in Asia and a temporary Chinese ban on exports. The fuel…
A war in Iran has disrupted global oil markets, leading to record-high oil prices and refining margins. The Strait of Hormuz has become a bottleneck for crude oil, causing reduced refining throughput in Asia and a temporary ban on Chinese exports. The crisis has exacerbated the fuel market's tighter supply situation, surpassing the crude market's constraints.
Major refiners have experienced bumper earnings, with Shell and TotalEnergies reporting their highest second-quarter profits since 2022, driven by high oil prices and refining margins. The International Energy Agency's executive director, Fatih Birol, warned of the need for oil security amid the ongoing hostilities and dwindling commercial inventories.
Despite the improved refining margins, the market remains tight due to restricted supply and capacity, with Chevron expecting upward pressure on product pricing into the third quarter.
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