Iran War Fuels Global Refining Boom, Big Oil Sees Record Profits
The ongoing war in Iran has triggered a new global refining boom, sending oil prices and refining margins to multi-year highs. This is the second time this decade that a war has disrupted global oil markets, with the first being the Russian invasion of Ukraine in 2022.
Refining margins have reached record levels due to tight fuel supply and low global inventories. The Strait of Hormuz, a critical shipping route, has been affected by the war, causing reduced refining throughput in Asia and a temporary ban on Chinese exports.
The world's largest oil companies, including Shell and TotalEnergies, have reported their highest second-quarter earnings since 2022 due to the jump in oil prices and refining margins. Shell's CEO Wael Sawan said that the company's refining performance has been 'excellent', while TotalEnergies' CEO Patrick Pouyanné noted that refining and chemicals performed exceptionally well.
Even if supply disruptions are resolved by the end of the year, low global inventories may support the global refining complex for a few more quarters. Chevron's CEO Mike Wirth said that diesel demand could rise in Europe due to restocking ahead of winter, which would add pressure on product pricing.