Middle East Conflict Triggers Global Crude Oil Production Disruption

A recent conflict in the Middle East has led to a significant disruption in global crude oil production, resulting in an estimated 1.4 million barrels per day (b/d) reduction in Q4 2026. According to Wood Mackenzie, this disruption has sent shockwaves through Asian refining, changing the dynamics of crude supply routes and product markets.

The conflict, combined with Ukrainian drone attacks on Russian refineries, has caused unit outages at 3.5 million b/d in August, tightening the global refining system further. Alan Gelder, SVP Refining, Chemicals, and Oil Markets Research at Wood Mackenzie, noted that 'the scale of disruption to global crude runs is without modern precedent.'

Asian refiners are navigating an immediate margin opportunity due to limited crude runs, driving refining margins to elevated levels across the region. US and European refiners have deferred scheduled maintenance into 2027 in response.