Executives from Valero, ExxonMobil and Phillips 66 say refinery outages in Russia, the Middle East and Asia are tightening fuel markets even as crude prices retreat.
Gasoline prices may stay elevated into the fall because global refining capacity has been damaged by the Russia-Ukraine war and Middle East conflict, leaving a tighter supply of refined products than crude oil. Patrick De Haan of GasBuddy said U.S. drivers could see a Labor Day record at the pump if Washington and Tehran do not reach a stable agreement on the Strait of Hormuz. AAA data show the national average for regular unleaded at about $4.06 a gallon, down from this year’s peak of $4.56 but still 36% above Feb. 27 levels before the Middle East war erupted. The pressure is coming from refinery bottlenecks rather than crude output alone. ExxonMobil CEO Darren Woods said available refining capacity is at historically low levels, with about 3 million barrels a day in the Middle East unavailable because of disruption in Hormuz and another 1 million barrels a day knocked offline in Russia by Ukrainian drone strikes. Phillips 66 executive Brian Mandell said the market remains short of product even if crude shipments through Hormuz improve. Refiner margins have surged, with the crack spread above $70 a barrel in late July, and second-quarter profits jumped at Valero, Marathon Petroleum, Phillips 66, HF Sinclair and PBF Energy. AAA data also show wide regional price gaps, with California at $5.62 a gallon and Indiana at $3.54, while De Haan said seasonal demand usually fades in the fall but the structural shortage could keep gasoline unusually expensive.