Refining Margins Surge as Global Fuel Markets Tighten

Global fuel markets have become increasingly tight due to refining capacity constraints, not crude oil supply disruptions. The Middle East conflict has driven refining margins to record highs, benefiting major refiners like Shell, TotalEnergies, ExxonMobil, and Chevron.

The International Energy Agency (IEA) warned that the supply imbalance extends beyond crude availability, with refinery activity and product supplies lagging behind crude deliveries.

Shell's second-quarter earnings more than doubled compared to last year, supported by higher oil and gas prices, strong refining margins, and record refinery utilization of 102 per cent. TotalEnergies reported a 68 per cent increase in adjusted net income, with its European refining margin marker rising to USD 12.4 per barrel.

Industry executives expect refining profits to remain elevated due to low global inventories, constrained refining capacity, and continued supply disruptions. Chevron's CEO Mike Wirth said middle distillates have become the tightest segment of the market, citing Russia's export restrictions and ongoing constraints in the Strait of Hormuz.