Refining Boom Fueled by War: A Temporary Golden Era
The current state of the oil refining industry is one of unprecedented profits due to disruptions in global supply chains. The Iran war has led to a significant reduction in Middle Eastern crude, forcing refineries to cut operating rates and resulting in record-high refining margins for gasoline, diesel, and jet fuel.
According to Reuters Open Interest calculations, combined refining volumes for major oil companies such as BP, Chevron, Exxon Mobil, Shell, and TotalEnergies fell from 16.4 million barrels per day in 2005 to 10.4 million bpd last year, representing a decline of around 9 million barrels per day.
However, the sector's problems cannot be repaired immediately, with damage to dozens of refineries in the Middle East and Russia taking months or even years to fix. Global spare refining capacity remains exceptionally thin, making it difficult for refiners to meet growing demand.