HOUSTON — U.S. energy giants ExxonMobil and Chevron have warned that the ongoing conflict involving Iran is likely to keep global diesel and refined fuel markets tight, sustaining elevated fuel prices through the second half of 2026 despite record refinery production in the United States.
The companies issued the warning on Friday as they reported significantly stronger second-quarter refining profits, benefiting from higher refining margins driven by shrinking global fuel inventories, reduced fuel exports from China and refinery outages in Russia.
Executives from both oil majors cautioned that supply disruptions linked to the Middle East conflict continue to weigh on global energy markets, with diesel and other refined petroleum products expected to remain in short supply.
Iran Conflict Continues to Tighten Global Fuel Markets
Chevron Chairman and Chief Executive Officer Mike Wirth said refined product prices are likely to remain under upward pressure well into the third quarter and possibly beyond.
“We’re going to see some upward pressure on product pricing into the third quarter and perhaps beyond that,” Wirth said during the company’s earnings conference call.
He added that long-term demand for distillate fuels—including diesel and heating oil—remains resilient, limiting the likelihood of any significant easing in prices.
The outlook reflects growing concerns that geopolitical tensions in the Middle East could continue disrupting crude oil flows and refining operations, even as global oil production remains relatively strong.
Record Refinery Output Fails to Ease Supply Constraints
Both ExxonMobil and Chevron said they have maximised refinery operations to help offset global supply shortages.
ExxonMobil reported operating its U.S. refineries at high utilisation rates while achieving a record second-quarter diesel production level.
Chevron also announced record throughput across its U.S. refining network, processing more than one million barrels of crude oil per day during the quarter.
Despite the increased output, ExxonMobil Chairman and Chief Executive Officer Darren Woods said refining alone cannot fully offset the broader supply challenges affecting global fuel markets.
He stressed that restoring normal crude shipments through the strategically important Strait of Hormuz remains critical to stabilising global energy supplies.
“The utilisation that we’ve seen can’t be sustained for the long term. So I think this refining challenge is going to be with the world for a while,” Woods said.
He noted that ExxonMobil operates the world’s largest refining system outside China, making the company particularly exposed to disruptions in global crude supplies.
Maintenance Work May Limit Refining Capacity
Chevron also warned that scheduled refinery maintenance during the third quarter is expected to reduce downstream earnings by between $175 million and $225 million.
ExxonMobil, however, said planned maintenance activities during the third quarter would be lower than in the previous quarter, potentially allowing for stronger operational performance.
Although ExxonMobil’s adjusted downstream earnings climbed to $4.1 billion, some market analysts had anticipated even stronger refining results given the company’s extensive refining capacity.
Fuel Prices Remain a Political and Economic Concern
The sustained strength in refining margins comes as U.S. gasoline prices have risen above $4 per gallon, increasing pressure on consumers and adding a political challenge for President Donald Trump’s administration ahead of the November midterm elections.
The two oil majors maintained that they are producing as much fuel as operationally possible, but warned that geopolitical disruptions rather than production capacity are now the primary driver of elevated fuel prices.
Market Reaction
ExxonMobil narrowly missed Wall Street’s second-quarter earnings expectations, while Chevron exceeded analysts’ forecasts.
Following the earnings announcements, ExxonMobil shares fell about 1%, while Chevron shares gained roughly 2%, reflecting stronger investor confidence in Chevron’s quarterly performance.
Global Energy Outlook
The comments from ExxonMobil and Chevron reinforce growing concerns across international energy markets that the Iran conflict could prolong volatility in global fuel prices.
For energy-importing countries, including many emerging economies, sustained high diesel and refined fuel prices could increase transportation costs, raise inflationary pressures and complicate efforts by central banks to stabilise economic growth.
Industry analysts say the duration of supply disruptions in the Middle East—particularly around the Strait of Hormuz, one of the world’s most critical oil shipping routes—will remain a key factor shaping global energy markets for the remainder of 2026.
Source: Reuters