Crude Oil Prices and Refinery Margins Surge in 3Q26 Amid Middle East Conflicts

Crude oil prices rose steadily in the third quarter of 2026, driven by escalating military conflicts in the Middle East, according to the US Energy Information Administration (EIA). The front-month futures price for Brent crude oil started the quarter at US$72 per barrel on July 1, marking the lowest point since late February. Prices began climbing after military strikes resumed on July 7, surpassing US$100 per barrel by July 23 before fluctuating between US$79 and US$98 per barrel until early September.

The volatility in prices reflected market reactions to geopolitical statements, disruptions in the Strait of Hormuz, and attacks on energy infrastructure in Russia and the Middle East. A peak in prices occurred on September 15, with Brent crude oil futures reaching US$109 per barrel and spot prices hitting US$132 per barrel. These increases were fueled by supply disruptions, particularly from Saudi Arabia, and the unwinding of measures that had previously mitigated price impacts, such as reduced crude oil imports to China and slower releases from the US Strategic Petroleum Reserve.

US refinery margins also saw significant gains in the third quarter of 2026, with refineries operating at high utilization rates of 95%. This marked the highest processing levels for the third quarter since 2019, driven by strong margins for transportation fuels. Crack spreads for motor gasoline, distillate, and jet fuel were elevated, with distillate fuel oil margins being the highest due to disrupted refining activities in key global regions. US distillate fuel inventories were 13% below the five-year average as of late September, while gasoline inventories were 7% below and jet fuel inventories were 3% above their respective five-year averages.