In Reply to: It's not just crude. There are also issues with refinery capacity posted by mh on August 24, 2026 at 09:16:41
The Iran war has pushed the global oil refining industry to the brink, signalling that diesel and gasoline prices may remain elevated for years. Deal or no deal, the global energy inflation shock is far from over.
While oil markets adapted remarkably well to the abrupt loss of a fifth of global crude supplies from the Middle East during the conflict, workarounds for the refining industry have been far more limited.
The divergence between crude and fuel prices tells the story. Benchmark Brent crude oil is currently around $90 a barrel. Even though that is up about 25% from levels at the outbreak of the conflict on February 28, it is a significant retreat from the wartime peak at $118.
Refined products have not enjoyed the same relief. European diesel prices have surged more than 70% since the war began, while U.S. gasoline prices have climbed around 60%.
This reflects a dramatic decline in refining output. The war knocked out more than 20% of the Middle East's 9.6 million barrels per day of refining capacity, according to the International Energy Agency, while fuel exports remain suppressed due to the closure of the Strait of Hormuz. The loss of Gulf crude, in turn, led many refiners, particularly in Asia, to curtail operations.
That strain was then amplified by months of relentless Ukrainian strikes on Russian energy infrastructure. These attacks have cut Russia’s refining throughput by nearly 30% to below 4 million bpd in recent months, forcing Moscow to ban diesel exports in July.
Meanwhile, diesel refining margins in Europe, Asia and the U.S. have surged to unprecedented levels. European diesel cracks have more than tripled since February to above $75 a barrel. U.S. diesel margins have climbed more than 140%, reaching a record $100 earlier this week.
The crisis has been mitigated somewhat by pre-war fuel stockpiles – but that buffer is essentially gone.