Trump hails oil flow as refining capacity drops 10%
President Donald Trump announced that oil is flowing 'like never before' due to military efforts securing the Strait of Hormuz, while simultaneously ordering a full blockade on Iranian ships. Despite this, market data indicates that 10% of global refining capacity, or 8 million barrels per day, is offline, driving the 3-2-1 WTI refining margin to a record $59 per barrel. Major U.S. refiners like Marathon Petroleum and Valero Energy are seeing significant stock gains as a result of these historic processing margins.
*this image is generated using AI for illustrative purposes only.
President Donald Trump declared that oil is flowing "like never before" due to United States military efforts keeping the Strait of Hormuz open, while market data reveals that approximately 10% of global refining capacity is offline. This supply shortage has driven refining margins to record highs, with the 3-2-1 WTI refining margin hitting $59 per barrel, nearly tripling since the beginning of 2026. The announcement comes alongside a "FULL Blockade" on Iranian ships and claims of "MASSIVE" trade deals from Gulf States to replace a 20% United States Reimbursement Fee.
Military Action and Gulf Deals
Trump credited military leadership, including Secretary of War Pete Hegseth and Chairman of the Joint Chiefs of Staff Dan Caine, for securing maritime routes. The Strait of Hormuz remains open to all vessels except those associated with Iran, which Trump cited for its "lying, violent, malicious leadership." To counter Iran, Trump ordered a blockade explicitly targeting ships arriving at or departing from Iranian ports, as well as those carrying Iranian cargo. Additionally, Trump stated he is replacing the reimbursement fee with major "Trade and Investment Deals" from Gulf States, expected to bring factories and equipment to the U.S. and create "millions of High Paying AMERICAN Jobs."
Refining Capacity Crisis
Despite assurances of freely flowing oil, factors such as the Iran War, attacks on Russian refineries, and reduced fuel exports have tightened the global supply chain. An estimated 8 million barrels per day—roughly 10% of global refining capacity—is currently offline. This supply shortage has kept prices for gasoline, diesel, and jet fuel elevated, even as crude oil trades approximately $40 per barrel below its March peak. Oil refiners are currently enjoying "historic profits" due to this severe capacity shortage.
Market Performance
Crude Oil WTI futures were trading higher by 0.47% to hover around $79.71 per barrel, while Brent Oil Futures were trading higher by 0.70% to hover around $85.32 per barrel. Major U.S.-listed oil refiners have seen significant stock performance gains recently due to the tightening global refining capacity and historic processing margins.
| Company (Ticker) | 1-Month Performance | YTD Performance | 1-Year Performance |
|---|---|---|---|
| Marathon Petroleum Corp. (NYSE: MPC) | 15.11% | 86.56% | 72.75% |
| Valero Energy Corp. (NYSE: VLO) | 16.53% | 85.16% | 102.48% |
| Phillips 66 (NYSE: PSX) | 12.26% | 56.11% | 56.15% |
| PBF Energy Inc. (NYSE: PBF) | 45.36% | 124.52% | 125.77% |
How will the full blockade on Iranian ships impact global crude supply if the conflict escalates beyond current expectations?
Can the current record refining margins be sustained if the 10% of offline global capacity returns to service?
What specific terms and timelines are expected for the new Gulf States trade deals intended to replace the 20% US Reimbursement Fee?
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