Exxon, Chevron Warn Fuel Prices to Stay High as Refining Capacity Shrinks
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ExxonMobil and Chevron warned that fuel prices are likely to remain elevated even if crude oil declines, as global refining capacity is critically short due to the wars in Russia and the Middle East. Nearly 10% of the world’s refining capacity is offline, leaving remaining plants running at full tilt and unable to boost output, according to Melius Research.
The Refining Bottleneck
Nearly 10% of global refining capacity is effectively offline, Melius Research estimates, with the Strait of Hormuz largely closed, continued Ukrainian attacks on Russian refineries, and China’s ban on fuel exports. Remaining refineries are running at maximum utilization, leaving no slack to boost fuel output. ExxonMobil CFO Neil Hansen said refining is “the constraint pain point” that markets are underestimating. Chevron CEO Mike Wirth highlighted that middle distillates — diesel, jet fuel, and heating oil — are under the most strain, and restocking before winter will tighten supply further.
Price Disconnect
U.S. retail gasoline has averaged above $4 a gallon, down only 10% from this year’s peak, while West Texas Intermediate crude has dropped 26% from its 2026 high. Diesel prices are just 6% below their highs. Goldman Sachs analyst Neil Mehta noted refining margins are “exceptionally high.” Tortoise Capital’s Rob Thummel said gasoline prices are increasingly driven by inventory levels, which are near historical lows, rather than by crude oil movements.
What's Next
ExxonMobil sees roughly 5 million barrels per day of refining capacity unable to reach the global market for the foreseeable future, signaling sustained pressure on fuel prices. It remains unclear whether governments will intervene to ease supply constraints or if high prices will ultimately curb demand.
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Exxon, Chevron Warn Fuel Prices to Stay High as Refining Capacity Shrinks
