EIA's July Review Shows U.S. Refinery Crack Spreads More Than Doubled in Q2 as Hormuz Disruption Reshaped Product Supply

EIA's July Review Shows U.S. Refinery Crack Spreads More Than Doubled in Q2 as Hormuz Disruption Reshaped Product Supply EIA data published on Wednesday (2026-07-15) show distillate and jet fuel crack spreads more than doubled year-on-year in the second quarter as Hormuz-driven supply disruption pushed American refiners to seven-year processing highs. EIA's July quarterly review, published Wednesday (2026-07-15), shows that U.S. refineries processed the most crude oil for any second quarter since 2019, when domestic refining capacity was 4% larger than it is now. The data frame how thoroughly the Hormuz closure reshuffled global product supply during the April-to-June period.⁶ Jet fuel and distillate crack spreads — the margin between crude input cost and finished product value — more than doubled against year-ago levels. The quarterly average gasoline crack spread rose 60% from the equivalent 2025 figure, as tightened international supply drove buyers toward alternative sources. Distillate production came in 5% above the five-year average for the period; jet fuel production ran 24% higher. Motor gasoline production was only 1% above the comparable period, underlining how sharply refinery output tilted toward the fuels facing the deepest supply gaps.⁶ The cause is the military action on February 28 (2026-02-28) that shut the Strait of Hormuz. Iraq, Saudi Arabia, Kuwait, the UAE, Qatar and Bahrain collectively shut in 10.5 million barrels per day (b/d) of crude output by April, according to EIA's May Short-Term Energy Outlook.³ That removed a significant share of global seaborne crude from markets that had little spare refining capacity outside the Americas. Export data show where the displaced supply demand landed. Distillate exports averaged 1.56 million b/d in the second quarter, 30% above the five-year average. Jet fuel exports averaged 356,000 b/d, more than double the five-year norm. American shipments stepped into gaps that Gulf refiners, running on curtailed crude supply, could not fill.⁶ The scale of the inventory drain that accompanied that export surge was significant. In the week of May 11 (2026-05-11), total U.S. crude and product stocks including the Strategic Petroleum Reserve fell approximately 24.1 million barrels, one of the five largest weekly declines on record. Exports of crude oil and petroleum products hit 14.2 million b/d that same week, 33% above the equivalent 2025 figure, according to EIA data.¹ EIA's July Short-Term Energy Outlook estimates global crude oil inventories fell at an average rate of 5.1 million b/d through the second quarter of 2026.⁶ The April STEO, which already assumed a later Strait reopening than the March outlook had modeled, had forecast a full-year global inventory decline of 2.6 million b/d for all of 2026.³ The Q2 draw rate ran roughly double that annual figure, concentrating into a single quarter the depletion originally spread across twelve months. ICE Brent crude front-month was trading at $83.79 on Wednesday (2026-07-15), down about 1%, as tentative flows returned through the strait and global crude stocks began recovering from their trough. Refinery crack spreads have not followed crude lower. Rigzone reported on July 3 (2026-07-03) that U.S. refiners were posting some of the best profit margins in years even as Hormuz shipping partially resumed, with supply-chain disruptions continuing to ripple through global markets.⁴ EIA's April forecast assumed shut-ins falling to 6.7 million b/d in May and production returning close to pre-conflict levels by late 2026.² That timeline assumes the partial strait reopening holds. The IEA warned in the week of July 6 (2026-07-06) that renewed U.S.-Iran hostilities could flip the global oil outlook from an anticipated surplus back into deficit before stocks had fully normalized.⁵ For airlines, truckers and industrial fuel buyers, elevated product costs have persisted through most of the quarter with no clear signal they are easing. Whether crack spreads begin to compress in the third quarter hinges on whether Gulf producers can sustain output recovery — and whether the re-escalation risk flagged by the IEA stays theoretical or becomes a second disruption before inventories have rebuilt.^5,2