Shell, ExxonMobil and Chevron Warn Pump Prices Will Stay High as Global Refining Capacity Falls 10%
Middle East and Ukraine wars, Chinese export curbs, and Russia's diesel ban have cut global refining capacity by up to 10%, Big Oil warns.
Shell, ExxonMobil, and Chevron on Monday (2026-08-03) joined analyst warnings that global fuel stocks are running dangerously low, saying pump prices are set to stay elevated regardless of where crude settles. Their warning backed a Bloomberg report from the week of July 27 (2026-07-27), which estimated that war damage in the Middle East and Ukraine, China's fuel export caps, and Russia's ban on diesel exports have together stripped as much as 10% from global refining capacity.8
The downstream numbers are stark. Global refining throughput in July fell by as much as 6.5 million barrels a day compared with July 2025, according to Goldman Sachs estimates, with war-related outages and lower Chinese run rates pulling in the same direction. The bank labeled the diesel crunch the single biggest threat in oil markets in a July 30 (2026-07-30) report, estimating that global diesel exports have dropped roughly 35% this month — a reduction of about 2.6 million barrels a day.6
Russia's contribution to that shortfall is substantial and worsening. Ukrainian drone strikes have pushed Russian crude-processing rates to an average of 3.91 million barrels a day so far in July, the lowest level since March 2005, according to figures compiled by EA Analytics. That represents a decline of more than 1.4 million barrels a day from the year-ago average. A Paris-based agency tracking Russian plant-level data put June processing at 3.8 million barrels a day, down 1.6 million barrels a day from a year earlier.5
The deterioration has been building for months. In April 2026, Russia's average refinery runs had already fallen to 4.69 million barrels a day, the lowest in more than 16 years, according to OilX estimates. Moscow was still weighing formal fuel export limits at that point; a diesel export ban followed as runs continued to slide.4
Middle East damage compounds the Russian shortfall. Energy Voice reported on July 31 (2026-07-31) that the Strait of Hormuz had been almost completely closed for 150 days, and that a brief ceasefire collapsed on July 8 (2026-07-08). Every day the strait remains shut, nearly 14 million barrels of oil, equal to 14% of global production, are diverted or lost, according to the Economist. Saudi and Emirati spare capacity, the market's traditional buffer, sits behind the blockade.2,7
Supply responses are limited. US shale producers are the conventional quick-response mechanism, but ramping output takes three to six months and would likely yield only 300,000 to 700,000 barrels a day in an initial surge, the Economist reported. Russia could theoretically add another 300,000 barrels a day, but with its energy infrastructure under sustained drone attack, it is struggling to hold current output.1
The damage has spread into petrochemicals. Naphtha, sourced almost exclusively from Gulf facilities and used as feedstock for plastics, is in short supply. Asian petrochemical plants are running at 60 to 75% of capacity as a result.1
ICE Brent crude front-month was at $84.86 a barrel as of early Tuesday (2026-08-04), with NYMEX WTI front-month at $81.16. Both sit well below the all-time highs above $160 that briefly prevailed in April 2026, after China cut its oil imports and US export volumes rose to absorb part of the supply gap. But refined products have not followed: NYMEX heating oil front-month was at $3.88 per gallon, with US diesel at the same level.8,3
Across emerging markets, fuel-price increases are already severe. Since the conflict began, petrol prices have doubled in Myanmar, risen 52% in Pakistan, 50% in the Philippines, and 40% in Nepal, according to Economist data. Roughly 10 to 15% of the demand impact has been absorbed by the Middle East itself, where economic activity has contracted sharply and airline traffic has fallen by two-thirds.1
Morgan Stanley estimated that floating inventory has supplied more than 3 million barrels a day since early March 2026, a buffer that markets appear to be leaning on. That buffer is finite. Its depletion rate, and any signal from Hormuz transit conditions as the conflict enters its sixth month, will define how much longer the diesel squeeze extends into Q3.1