“President Trump wanted to have U.S. energy dominance and low energy prices. He is getting one without the other -- and he hates it.
The Iran war and Ukrainian strikes on Russian refineries knocked out a big chunk of the world's fuel-making apparatus, leaving the U.S. oil industry as the world's last major fuel supplier and a global supply shock that could last well into next year.
U.S. refiners are running plants at full tilt to meet demand at home and abroad as fuel prices soar, giving them windfall profits and drawing the ire of President Trump, who ripped into oil companies this week for wringing too much cash out of American gas pumps.
While U.S. gasoline exports have held relatively steady, diesel exports hit a record 1.9 million barrels a day last week and jet-fuel shipments were near record levels, according to data from the Energy Information Administration.
The White House is watching inflation and affordability issues heading into the November midterm elections and high diesel prices can boost the price of everything from groceries to lumber. But Trump's energy frustrations aren't likely to be solved this year.
Bringing prices at the pump down will require global energy flows to recover to their prewar levels, according to the chief executives of ExxonMobil, Marathon Petroleum and Valero. That means rebuilding refineries across the Middle East, from Saudi Arabia to Kuwait to Bahrain, that Iran targeted. Energy analysts said they expect markets to remain tight through the end of 2027.
Ukrainian drones continue to rain down on Russian energy assets, too. Russia, once a top exporter of fuel, had about a third of its refining capacity knocked offline and banned some fuel shipments until January. Meanwhile, fuel exports from China collapsed, in part because it is getting less crude to process from the Middle East.
The Iran conflict has stymied traffic in the Strait of Hormuz, a vital artery for oil voyages from Gulf countries. Saudi Arabia's oil exports to the U.S. dropped to zero in July, the first time monthly federal data show that happening since 1985. U.S. refiners have opted to buy more crude oil to process from American oil fields, as well as from Canada and Venezuela.
Trump said in a Fox News interview on Tuesday that U.S. negotiators were close to a deal with Iran that could open the strait, and he believed the move would trigger the average price of a gallon of gasoline in the U.S. to fall to $2.50. As of Thursday, the U.S gas price averaged $4.06 a gallon.
The persistent problem, executives say, is refining. "I've never seen the available capacity relative to demand as low as it is today," said Darren Woods, CEO of Exxon, the nation's third-largest oil refiner. "It's going to take a while for the industry to kind of climb its way out of that hole."
Roughly five million barrels a day of the world's refining capacity is out of commission between the Middle East and Russia, energy executives said.
At the same time, the world is projected to consume roughly 65 million barrels a day of gasoline, diesel and jet fuel this year, according to the International Energy Agency.
White House spokeswoman Taylor Rogers said U.S. refining capacity is critical to keeping energy prices low for families and businesses, and blamed Democratic climate policies for "shuttered refineries across the country."
"President Trump has reversed those destructive policies to ensure the United States, and the world, has access to reliable, affordable, and secure energy," she said.
More than two dozen refineries shut down in the U.S. since 2000. Several big refineries have become more massive in recent years, as energy companies built additional units at plants to allow them to make more fuel. The nation's collective fuel-making capacity is 3% lower than it was at its peak in 2019, according to federal data.
The Trump administration in March unveiled a refinery project in South Texas, backed by India's Reliance Industries. If it comes to fruition, the complex would be the first new refinery built in the U.S. since 1977.
Meanwhile, China, a key fuel provider to the global economy, slashed exports as crude supplies from the Middle East petered out. Shipments from China averaged between 650,000 and 900,000 barrels a day in recent years, but now exports stand about 350,000 barrels a day, said Brian Stetter, an analyst at S&P Global. The country partially lifted a ban on fuel exports last month, executives said, but it has hardly made a difference to global supplies. "Our traders aren't really seeing any Chinese barrels leave the region," said Gary Simmons, Valero's chief operating officer.
The global shortage of fuel that caused prices to rise kicked U.S. refiners into high gear. U.S. fuel factories used 97.2% of their operable capacity in late July, according to federal data, a level last seen in 2018.
As refineries crank out more fuel to meet demand, energy companies are raking in billions of dollars. Marathon, Valero and Phillips 66 all reported their highest second-quarter earnings in four years. Marathon earned $5.1 billion, quadrupling its profit from the same period last year. Valero booked net income of $3.7 billion, up more than fivefold. Phillips 66 collected $3.8 billion, more than four times the profit the company made a year earlier. Shares of Marathon and Valero are up about 85% this year. Phillips 66 stock is up nearly 60%.
Exxon, which Trump criticized for posting a $14.5 billion profit last week, reported that $5.5 billion of that came from refining operations, quadrupling what it made last year. The company has nearly two dozen sizable refineries from Texas to Singapore.
Valero's Simmons said the world's inventory of refined fuels including gasoline and diesel are 130 million barrels below normal levels for this time of year.
As U.S. refineries run flat out, U.S. inventories are still dropping because of voracious demand. The nation's commercial and strategic stockpiles of crude dropped to their lowest level in 42 years by July 31, to 711.8 million barrels, while diesel stocks fell by 3.5 million barrels and gasoline stocks dropped by 1.6 million barrels, according to federal data.
The largest refiners have had no appetite to build new multibillion-dollar facilities, in large part because of the adoption of electric vehicles.
"The only way we'd see massive investment in refining capacity is really for [current] margins not only to stay where they are, but we would need duration of those refined margins," said S&P Global's Stetter. Refiners don't believe the windfall will last, he said.” [1]
Who's laughing in the corner? It's Israel's Netanyahu and Kiev's Zelensky. They promised victories and deceived US President Trump, whose party is losing control of the US Congress and Senate due to the prices they have elevated.
1. Refiners Go Full Tilt Amid Fuel Crunch. Morenne, Benoit; Eaton, Collin. Wall Street Journal, Eastern edition; New York, N.Y.. 07 Aug 2026: A1.
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