The expiring September diesel crack spread reached a record $102.49 per barrel before easing, underscoring tightening global refining capacity amid sustained geopolitical disruptions and structural closures across major markets.
Refinery capacity reductions in North America and Europe have exacerbated supply tightness. The Come By Chance refinery in Newfoundland, which once processed up to 130,000 barrels per day, remains shuttered since 2020. Meanwhile, Saudi Arabia’s Jazan oil refinery, with a 400,000 bpd capacity, has faced repeated Houthi attacks, including a recent strike that forced a temporary shutdown at the end of July.
Geopolitical tensions in Eastern Europe have further strained refining operations. Ukrainian drone strikes have targeted at least 24 of Russia’s 34 major refineries over recent months, reducing Russian crude processing to 21-year lows. In response, Moscow imposed a ban on diesel exports. Russia retaliated by striking fuel storage facilities at Ukraine’s Odesa port, disrupting regional fuel logistics.
U.S. natural gas markets reflect a contrasting dynamic. The Energy Information Administration projects marketed production will average a record 122.5 billion cubic feet per day in 2026, up from 118.5 Bcf/d in 2025. First-half 2026 output is estimated at 121.3 Bcf/d, a 4% increase from the same period in 2025. Front-month natural gas futures slipped to a one-week low near $2.70 per MMBtu, reflecting near-term demand softness despite structural production growth.
In Europe, policy-driven closures continue to reshape the refining landscape. Since 2000, approximately 30 to 34 refineries have been shut down or converted in the EU. The UK North Sea faces accelerated decline, with hundreds of sites slated for closure by 2030 due to the absence of new exploration licenses, higher taxes, and managed phase-outs.
Hurricane Lala compounded regional disruptions when it passed south of Hawaii’s Big Island on August 15. The Category 1 storm delivered rainfall exceeding 43 inches in some areas, triggering flash floods, landslides, and power outages for hundreds of thousands of residents. The storm also disrupted operations at Shell’s facilities in Montreal, Dartmouth, and Oakville, as well as Petroineos’ Grangemouth refinery in the UK, Shell’s Wesseling unit in Germany, and portions of Eni’s Italian refining network.
Saudi Aramco’s Jazan refinery remains a focal point of regional instability. The facility, located on the Red Sea coast, has been struck three times in two weeks, according to Houthi claims. The attacks follow the seizure of a UAE-linked tanker near Qeshm by Iranian authorities, citing alleged violations of maritime laws. The incidents occur against a backdrop of heightened regional tensions and a 60-day diplomatic window that has since lapsed.
