Ongoing Wars Fuel Global Oil Shortages as Refining Capacity Takes a Hit

The ongoing wars in Iran and Ukraine are escalating oil shortages worldwide, with few signs of relief in sight. The conflict has led to widespread damage to Middle Eastern energy infrastructure, including refineries and pipelines, resulting in a significant reduction in crude oil production and refining capacity.

According to estimates by J.P. Morgan, over 1.2 million barrels per day of oil refining capacity across the region is out of operation due to physical damage. The conflict has also disrupted shipping through the Strait of Hormuz and the Bab el-Mandeb strait, causing a significant increase in fuel prices.

Ukraine's mastery of long-range drones has resulted in successful bombing of over 11 major Russian refining complexes, knocking out a significant share of Russia's fuel-making capability. Estimates vary from 30% to 60% of the nation's refining capacity being compromised.