US refiners are running at more than 95 per cent capacity to fill a global fuel gap, but prolonged high utilisation and deferred maintenance could trigger refinery failures and deepen an already fragile energy crisis.
The Iran war is creating a threat that goes well beyond disrupted crude oil supplies: it is putting unprecedented pressure on the US refining system, raising the risk that American refineries could become the next weak link in a strained global fuel market.
US refineries have operated above 95 per cent utilisation for 11 consecutive weeks, marking the longest sustained stretch at such levels in more than 25 years. Refiners have ramped up production and exports as war-related disruptions in Iran and Russia have sharply reduced global refining capacity.
The surge has been highly profitable. Refining margins have averaged more than $50 a barrel since the start of the conflict, more than twice the 10-year average. Major US refiners, including Valero, Phillips 66, Marathon Petroleum and ExxonMobil, have reported record or near-record second-quarter earnings.
But the extraordinary profits are creating a dangerous incentive to keep plants running at maximum speed.
Why US refineries are under pressure
The global refining system has suffered major disruptions since the Iran war began. The closure of the Strait of Hormuz has severely disrupted oil flows and refinery operations, particularly in Asia, while Ukrainian attacks have damaged Russian refining infrastructure. Moscow also suspended diesel exports in July.
The result has been a sharp decline in global fuel production. IEA data cited by Reuters show global refinery output at about 81 million barrels per day in July, roughly 5 million bpd below the level a year earlier.
More from BusinessUS refiners have stepped into the gap, pushing crude and refined-product exports higher. Diesel exports, in particular, have reached record levels, while US fuel inventories are coming under increasing pressure.
The hidden risk: deferred maintenance
Running a refinery at exceptionally high rates for an extended period can increase the risk of equipment failures and unplanned shutdowns.
To take advantage of unusually high margins, some US refiners have postponed scheduled maintenance, shifting work into late 2026 or even 2027. That could leave ageing and highly complex plants operating under sustained stress for longer than normal.
History offers a warning. US refineries also sustained utilisation above 95 per cent for extended periods in 1997 and 1998. Following the 1998 run, utilisation fell sharply as several plants were forced into emergency maintenance. A similar decline occurred in 2018 after an eight-week stretch above 95 per cent.
Why a US refinery outage could become a global crisis
The current situation is particularly sensitive because there is little spare capacity elsewhere.
Global refining output is already estimated to be around 2 million bpd below demand, according to the Reuters analysis. At the same time, fuel inventories are declining, and refining infrastructure in the Middle East and Russia has suffered significant damage.
That means the US has increasingly become a supplier of last resort for global fuel markets.
If American refineries suffer significant unplanned outages, the impact could therefore extend well beyond the US. Losing even a portion of US refining capacity could tighten gasoline, diesel and jet-fuel supplies, push prices higher and intensify inflationary pressures.
The Iran war has already exposed the vulnerability of the world’s oil-supply system. The next risk may be the refining system itself — and the US, which has helped cushion the global fuel shock, could become its most important pressure point.
