US Midwest Refiners at 100% Capacity as Gasoline Stocks Sit 6% Below Seasonal Norms
With global refining capacity effectively cut by 10% and a 300,000 b/d Canadian plant heading offline in September, the US product market has almost no slack left.
Midwest refiners were running at virtually 100% of capacity as of Tuesday (2026-08-04), Bloomberg Surveillance reported, a sign that US refiners have exhausted the utilisation headroom that would normally absorb additional supply stress.7
US commercial oil stocks were 6% below the five-year seasonal average as of mid-July (2026-07-17), according to OilPrice.com, even after a small weekly build. Stocks at Cushing, Oklahoma and in the Strategic Petroleum Reserve sat at multi-year and four-decade lows, respectively. Refiners running at maximum are covering current demand, not rebuilding reserves.4
Shell, Exxon and Chevron warned on Monday (2026-08-03) that pump prices are set to stay elevated. Bloomberg reported that wars in the Middle East and Ukraine, combined with China's caps on fuel exports and Russia's ban on diesel, have effectively reduced global refining capacity by as much as 10%. The EIA described second-quarter 2026 petroleum markets as shaped by continued disruptions to crude and product flows through the Strait of Hormuz.6,1
The EIA's July Short-Term Energy Outlook showed US refineries processed the most crude in any second quarter since 2019, a year when domestic refining capacity was 4% higher. Global crude inventories fell an estimated 5.1 million barrels per day on average through the second quarter of 2026, EIA said. Margins reflect the pressure: the quarterly average gasoline crack spread for that period was up 60% from the year-earlier level, with distillate and jet fuel spreads also elevated.1
US wholesale diesel futures climbed 26% through July (2026-07), OilPrice.com reported. NYMEX heating oil front-month stood at $3.92 per gallon and RBOB Gasoline front-month at $2.95 per gallon as of Friday morning (2026-08-07). Neither level suggests the product market is pricing in any near-term easing.4
Export volumes are adding to the domestic pressure. EIA estimated US distillate exports averaged 1.56 million barrels per day in the second quarter of 2026, 30% above the five-year average. Jet fuel exports averaged 356,000 barrels per day, more than double the five-year average. Barrels leaving the system at those rates slow any inventory recovery.1
Bloomberg Surveillance observed on July 30 (2026-07-30) that crude is not where the tightness originates; the constraint sits in refined products. ICE Brent crude front-month traded at $83.34 per barrel as of Friday morning (2026-08-07), a relatively contained crude price that masks tighter conditions downstream.5
Into this balance, Irving Oil's Saint John refinery in New Brunswick, capable of processing about 300,000 barrels per day and Canada's largest, is planning a turnaround from early September through mid-November, according to the company's website. A shutdown of that scale could crimp northeast US supply at a point when domestic refiners have no spare throughput to offer as a compensating response.2
Rystad Energy warned that strategic stocks are unlikely to be refilled quickly following any further supply disruption, leaving the market dependent on incremental physical barrels. The consultancy assessed a 20% probability for a scenario in which two waterways close simultaneously and the resulting deficit overwhelms market buffers, an outcome it described as producing sustained elevated product prices.3
The September (2026-09) Irving maintenance window is the next fixed date on the calendar. US refiners are already at capacity, product stocks are near multi-year lows, and the 10% reduction in global refining availability has not reversed. There is no obvious throughput increase available to offset a 300,000 barrel-per-day regional outage when it arrives.2,76