Refining Capacity Strains Fuel Prices Amid Global Conflicts

High fuel prices are expected to persist despite falling oil prices due to global conflicts straining refining capacity, according to ExxonMobil and Chevron. Refining is now the bottleneck in the global energy system, with margins reaching exceptional levels.

The Strait of Hormuz remains closed, and continued attacks on Russian refineries by Ukrainian forces have reduced available refining capacity by nearly 10%. In addition, China's export ban has contributed to the global shortage.

ExxonMobil's Gulf Coast refineries ran at 95% utilization in the second quarter, while Chevron's US facilities operated at 97%, showing the strain on the system. As a result, fuel prices remain stubbornly high, even as oil prices decline.