The global energy market has once again been strongly impacted by geopolitical conflicts in the past decade. Following the Russia-Ukraine conflict in 2022, the turbulent situation in Iran has once again completely reshaped the global supply and demand pattern for crude oil and refined products. Disruptions to shipping in the Strait of Hormuz, fuel export controls in many countries, and refinery maintenance disruptions have led to a supply shortage in refined products far exceeding that in the crude oil market. Refining profits have soared to multi-year highs, with leading global oil giants and refining companies fully reaping the industry benefits, resulting in a significant surge in second-quarter performance. Analysts predict that, supported by low inventories and restocking demand, the high refining profit margin will continue, and the structural tight balance in the energy market will persist for a long time.

Multiple geopolitical disturbances have led to an extremely tight balance between supply and demand for refined oil products.

The core contradiction in this round of energy market competition has long since shifted from the traditional crude oil production gap to a shortage of refined oil product distribution and processing capacity. The ongoing situation in Iran continues to disrupt shipping through the Strait of Hormuz, blocking nearly 30% of global crude oil transportation routes, directly leading to a passive decline in the processing capacity of refineries in many Asian countries. Coupled with the temporary export controls on refined oil products by major Asian countries and the implementation of Russia's diesel export ban, the global fuel supply system has suffered multiple shocks. Compared to the fluctuating crude oil market, the supply gap for terminal refined oil products such as gasoline, diesel, and jet fuel continues to widen, and this supply-demand mismatch has directly driven global refining profits to record highs. Over the past five months, international crude oil prices have experienced significant volatility, but the tight supply and demand situation in the refined oil market has not eased. The escalating situation in the Middle East and the continued decline in global fuel inventories have further amplified the pressure on refined oil supply. Fatih Birol, Executive Director of the International Energy Agency, stated that the current escalating geopolitical conflicts and the continued decline in commercial crude oil inventories mean that global oil security risks cannot be ignored. He added that the recovery speed of refinery capacity and refined oil supply is currently lagging far behind the recovery pace of crude oil transportation, and the tightness in the refined oil market, such as diesel and gasoline, is significantly higher than in the crude oil market. Even with sufficient reserves in various countries, it is impossible to offset the structural supply shortage of refined oil products in the short term.

The oil refining industry is booming, and international oil giants are experiencing a comprehensive surge in performance.

The extremely tight refined oil market has spurred unprecedented refining profits, with major global oil giants generally reporting their highest profits since 2022 in the second quarter. This surge in profits is not only attributed to rising oil prices, but also to the strong performance of refining, chemical, and trading businesses, which have become the core pillars of the companies' better-than-expected results, ushering in a comprehensive boom cycle for the industry. European energy giant Shell performed particularly well, with its second-quarter net profit doubling year-on-year, significantly exceeding market analysts' expectations. Shell's refinery utilization rate climbed to 102% in the second quarter of 2026, a significant increase from 99% in the first quarter, with reduced equipment maintenance driving full capacity release. During the same period, Shell's global refining profit rose from $17 per barrel to $24, and chemical profits more than doubled, resulting in a substantial improvement in the company's operating efficiency. Shell CEO Wael Sawan stated that the refining business performed exceptionally well this round, fully capitalizing on the structural market dividends. Total Energy also saw a significant increase in performance, with adjusted net profit surging 68% year-on-year to $6 billion in the second quarter of 2026. Total Energy's European refining margins rose 19% quarter-on-quarter, nearly tripling compared to the first half of 2025. Total Energy CEO Patrick Pouyanné stated that the company leveraged a favorable market environment, precisely managed the refined product supply gap, maximized refining margins, and delivered better-than-expected results in its refining and chemicals segments.

The industry's growth potential is sustainable, and the tight energy balance is unlikely to reverse quickly.

From a medium- to long-term perspective, the current refining boom is not a short-term impulsive phenomenon. Even if geopolitical tensions ease by the end of the year and transportation of crude oil and refined products from the Middle East resumes smoothly, persistently low global fuel oil inventories, rigid restocking demand in the industry, and limited idle refining capacity will continue to support the refining sector's prosperity, and the high-profit environment is expected to continue for several quarters. Against the backdrop of a structural reshaping of global energy supply and demand, a tight balance in refined products and high refining premiums will become the core themes of the future energy market. Overall , geopolitical conflicts are reshaping the global energy trade landscape, completely opening up profit margins for the refining industry, and oil giants are fully benefiting from this structural market trend. In the short term, the problem of refined product supply shortages is difficult to eradicate, and the industry's high prosperity is highly certain to continue. The market needs to continuously monitor geopolitical situations, refinery maintenance progress, and global inventory changes, as these will directly determine the subsequent trends in fuel oil prices and refining profits.