A supply shock tied to the Iran war and other disruptions has moved from crude shortages into a fuel supply crisis, driving record refining profits and sharply higher prices for diesel, jet fuel and gasoline.
Global refining capacity is constrained by attacks and export curbs in the Middle East, Russia and China, leaving the US Gulf Coast as the main source of refined fuel.
The diesel crack spread hit a record $102 a barrel, signaling severe diesel tightness and huge refining margins.
Higher fuel costs are already passing through to consumers and businesses: national regular gas averaged $4.07 per gallon and diesel is about 48% higher year-over-year.
# What's happening Oil prices are high again, but the bigger problem is a fuel supply crunch. What started as a crude shock tied to the Strait of Hormuz has become a breakdown in how much crude refiners can turn into usable gasoline, diesel and jet fuel.
# Why refiners can't keep up
China has sharply cut oil imports and limited fuel exports to protect its domestic supply. That combination has left the US Gulf Coast effectively as the world's primary available refining region, and American refineries are running flat out to capture unusually high margins.
# What the markets are signaling Refiners' profit measure for diesel, the diesel crack spread, jumped to $102 a barrel — the highest on record. That level shows the market believes diesel is severely short. Bank of America noted this is the start of the U.S. demand season with "very little margin for error."
Large U.S.-based refiners and oil companies have benefited. Shares of Marathon Petroleum and Valero have more than doubled year-to-date, Phillips 66 is up about 90%, and major oil companies are seeing booming profits. Exxon reportedly made $160 million per day in the last quarter.
# How consumers and businesses feel it
Brown University's Climate Solutions Lab estimates higher diesel prices have cost U.S. consumers nearly $40 billion since the war started.
# Risks ahead U.S. refiners are pushing hard, but two seasonal threats could reverse the supply picture quickly. Hurricane season poses a known risk to Gulf Coast refinery operations. Fall typically brings refinery maintenance slowdowns, which reduce output — precisely when demand could remain strong.
# Bottom line The immediate crisis is less about crude availability and more about refining and fuel logistics. Attacks on refineries, export bans and shipping disruptions have reduced global refining capacity and curtailed exported fuel flows. That has pushed refining margins to record levels and translated into higher pump prices and transportation costs for consumers and businesses. The situation leaves little buffer for weather or maintenance disruptions as seasonal demand rises.
Por Matt Egan, CNN Los precios del petróleo vuelven a estar preocupantemente altos, pero el problema más grave acecha justo debajo de la superficie. Lo que inicialmente comenzó como una crisis de suministro de petróleo causada por el bloqueo del estrecho de Ormuz se está transformando en una crisis de suministro de com
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Red Flag Warning: Upper Snake River Valley/Idaho Falls BLM; Middle Snake River Valley/Twin Falls BLM north of the Snake River until Aug 10 at 3:40 AM
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