Iran War Triggers Global Refining Boom Amid Record Profits for Big Oil

A war in Iran has disrupted global oil markets, causing a shortage of refined fuel products and sending refining margins to record highs. This is the second time this decade that a conflict has had a significant impact on oil prices, with the previous instance being the Russian invasion of Ukraine in 2022.

The Strait of Hormuz, which connects the Persian Gulf to the Gulf of Oman, has seen reduced oil shipments due to the war, leading to tighter fuel markets. In response, China has temporarily banned exports of certain refined products, further reducing supply and driving up refining margins.

The world's biggest oil companies have benefited from the situation, with Shell and TotalEnergies reporting their highest second-quarter earnings in years. Shell's global indicative refining margin rose to $24 per barrel from $17 in the first quarter, while TotalEnergies' adjusted net income jumped 68% year-over-year.