Refining Output Is Now Shrinking Faster Than the Demand for Fuel, Which Is Exactly Why Margins Keep Climbing

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'We'll Probably Hit Them Hard Again Tonight': Trump Just Unleashed 80 Strikes on Iran After It Attacked Ships in the Strait of Hormuz

The war with Iran has been underway for almost half a year, and its impact on global energy is obvious. Still, the focus is no longer only on crude oil prices, but also on how fuel is refined, transported, and traded worldwide.

On Thursday, Brent crude soared to $93.81 a barrel, the highest level in more than three weeks.

Oil Tanker

Generic Oil Tanker Image. Image Credit: Creative Commons.

Oil Platform

Oil Platform. Image Credit: Creative Commons.

Refined fuels, however, are facing even bigger problems. European diesel prices have surged by upwards of 70% since the U.S. and Israel launched joint attacks against Iran on February 28. American gas prices have also soared by 60%.

More Refinery Capacity Needed

Over 20% of the Middle East’s refining capacity, which usually sits at approximately 9.6 million barrels a day, has been taken out of service during the war.

Reuters reports that the Hormuz disruption has also been a major blow to fuel exports, with some Asian refiners slashing industrial production due to a shortage of crude oil from the Gulf.

Industry is also under pressure in part due to Ukraine’s strikes on Russian energy infrastructure.

Putin’s regime is suffering, with Russian refining plummeting to around 3.9 million barrels per day in July, near its lowest level in two decades.

Russia, a net diesel exporter until this summer, has also tightened diesel exports due to fuel shortages on its own soil.

Filling stations across Moscow have this week reimposed strict gas purchase limits due to Ukrainian drone attacks on Russian fuel supply networks.

Gazprom Neft has said people may only buy between 40 and 60 liters. Such restrictions were already in place in other parts of Russia.

The Ukrainian strategy of hitting Russia’s fuel supply shows no signs of abating. On Thursday, Kyiv said it had hit Russia’s TANECO refinery and the Tamanneftegaz oil terminal overnight.

The Diesel ‘Squeeze’

The U.S. diesel “crack spread”  – essentially the margin between the price of crude and the diesel made from it – surpassed $100 per barrel for the first time this week, reaching a record $102.20 on Monday.

U.S. distillate inventories have also fallen to their lowest August level since 1996 despite American refiners increasing output.

Refineries have little spare capacity to quickly plug the gap. Global refinery processing in July was around 5 million barrels per day lower than a year earlier, according to the IEA.

Reuters’ August 20 analysis estimates that refinery runs in the second quarter were 5.1 million barrels per day below last year’s level.

Demand for refined products fell too, but by only around 4 million barrels per day, leaving supply shrinking faster than consumption.

What if the Strait Reopens?

Even if a diplomatic deal is struck, a resumption of shipping through the Strait of Hormuz would not necessarily aid consumers immediately.

More than 20 Gulf refineries were damaged during the conflict. Restoring them requires specialized equipment including compressors, heat exchangers, and catalysts, for which supply times were already lengthy before the war.

The West also entered the crisis with refining capacity already diminished.

The Financial Times reported Thursday that S&P Global Energy expects European refinery capacity to fall another 20% by 2035, to just over 9 million barrels per day. U.S. capacity is projected to decline 7% over the same period to 16.7 million barrels per day.

Europe shut roughly 500,000 barrels per day of capacity last year alone, while Britain lost two of its six refineries.

Refining margins might be high today, but maintenance is pricey, facilities are aging, and newer refineries in Asia and the Middle East are offering major competition.

Prices Surge

U.S. consumer prices were 3.4% higher in July than a year earlier, according to the Bureau of Labor Statistics. Energy costs jumped 14.7%, while gasoline prices rose 24.6%.

Eurostat, meanwhile, put eurozone inflation at 2.9% in July, with energy prices up 10% year on year.

Even if the Strait of Hormuz traffic reverted to pre-war levels tomorrow, much damage has been done. Gulf refineries are being repaired due to strikes, and inventories are running low.

Whatever the next move is, the crisis is far from over.

About the Author: Georgia Gilholy

Georgia Gilholy is a journalist based in the United Kingdom who has been published in Newsweek, The Times of Israel, and the Spectator. Gilholy writes about international politics, culture, and education.

IN the summer of 2019, I was seated in the wine cellar of a walled Medieval town high above the Dordogne Valley of France, not far from Sarlat-la-Canéda, making phone calls, writing reports. I have given this story in other places and it appears as though you’re about to hear it again. Rob Skiba is a name you that you might be familiar with. Though he had made a name for himself as a Nephilim researcher, more recently Rob had taken a dive into the deep end of the pool via flat earth research. The recorded interviews I conducted between he and Rick Hummer, a fellow flat earth investigator and close friend of his, was published while still occupying that very wine cellar. Read all about it. Chicago Is Not a Mirage.

Word quickly spread. Within a few short weeks, dozens of flat earth researchers began accepting my invite for a private interview, if not a series of interviews. From a 17th-century tower built by King Louis XIV, and with a stunning view of the Alps, I sat down with Robbie Davidson, founder of the Flat Earth International Conferences, conducting multiple sessions. While staying in Dumfries, Scotland, David Weiss agreed to take part in the interviews, as did Bob Knodel of Globebusters. There were others. But when I asked the interviewees to discuss the moments that shaped their lives, among the many PSYOPs, false flag attacks, and hoaxes that were discussed, only these men committed commentary to the false 9/11 narrative.

The resulting recordings ballooned into The Unexpected Cosmology, a book which became a website and was even intended as an anthology. And of course, the following discourse was originally a chapter. It was Walt Disney who stated, “Disneyland will never be completed. It will continue to grow as long as there is imagination left in the world.” Those sentiments remain applicable here as well. American Sensationalism: The 9/11 Interviews was always intended to be expanded upon with the inclusion of new researchers. So I’m sorry to say the project became stagnant during the Covid-19 psychodrama. I took a break to tackle other projects. We lost Rob Skiba. Rob offered hours of private conversation regarding his life but we never got around to the big one. 9/11. It was in the cards. Sadly, Bob Knodel died soon afterwards. Voices are being squeezed from an entire generation. Gnosis passes with them.

In the aftermath, the FE community became fractured. People began going their separate ways. Robbie Davidson, among a noted few others who were interviewed for the project, got up and left the movement altogether. It is not my intent to erase his or the contributions of others if only brief. They came, they went, their testimonies remain.

The original vision may have hit roadblocks but it is not forgotten. I expanded this paper a few years later to include testimony from author Pauly Hart, a dear friend of mine. I had wanted to continue that trend every year thereafter but you know how it goes. For the 25th anniversary of the attack I have redirected my efforts to its first large scale expansion, including Andrew Hoy and Darrin Geisinger into the mix. Perhaps others will lend their experiences to the recorder in time.

The following is their report.

Read the 9/11 Interviews

Watch the Interviews