War, oil, and windfall profits

XTI/USD

Key zone: 76.50 - 81.50

Buy: 83.50 (on a decisive break above 83.00); target 87.50; StopLoss 82.80

Sell: 76.00 (on strong negative fundamentals); target 73.50-71.50; StopLoss 76.70

The Strait of Hormuz remains the single biggest source of risk for the global energy market. Yet the true winners of this crisis are not oil producers.

The military conflict involving Iran, reduced exports of Russian refined petroleum products, and limited spare refining capacity have led to a sharp expansion of the crack spread—the industry's key profitability indicator. Today, the real shortage is no longer crude oil but refined fuels.

Let's recap.

In the second quarter of 2026, oil refining became the most profitable segment of the global energy market. Record refining margins and resilient demand for diesel, gasoline, and jet fuel delivered the industry's strongest financial results in years.

The military conflict surrounding Iran fundamentally reshaped the market balance. Shipping restrictions through the Strait of Hormuz simultaneously pushed crude oil prices higher while further tightening supplies of refined petroleum products. As a result, diesel, gasoline, and jet fuel prices increased much faster than crude oil prices.

U.S. refiners emerged as the biggest beneficiaries. Access to crude oil from the United States, Canada, and Venezuela allowed them to remain largely independent of the Strait of Hormuz while selling refined products at record global prices.

As of early August 2026, U.S. diesel and jet fuel prices were approximately 41% higher than before shipping restrictions were imposed in the Strait of Hormuz. Operating refineries effectively gained the ability to dictate pricing conditions in the global market.

The main beneficiaries of the crisis:

• Valero Energy (NYSE: VLO)
• Marathon Petroleum (NYSE: MPC)
• Phillips 66 (NYSE: PSX)
• ExxonMobil (NYSE: XOM)
• Chevron (NYSE: CVX)
• HF Sinclair (NYSE: DINO)
• PBF Energy (NYSE: PBF)

Among them, Valero Energy, Marathon Petroleum, and Phillips 66 appear to be the most resilient. Their large refining capacity, strong balance sheets, and operational efficiency enable these companies to maintain high profitability even if crude oil prices gradually decline.

For investors seeking higher returns and willing to accept greater risk, HF Sinclair and PBF Energy offer compelling opportunities. Their financial performance depends more heavily than that of their peers on the size of refining margins: when crack spreads widen, earnings grow faster than the market, but when margins normalize, their shares are likely to face significantly stronger pressure.

Another supportive factor is the rebuilding of strategic inventories.

According to the U.S. Energy Information Administration (EIA), global oil inventories declined by 5.1 million barrels per day during the second quarter and are expected to decrease by another 2.2 million barrels per day in the third quarter. Following such extensive inventory drawdowns, the global market faces a prolonged replenishment cycle. This implies sustained demand not only for crude oil but, more importantly, for diesel, gasoline, and jet fuel.

Political risks are also increasing. President Trump has already publicly criticized major oil companies for their record profits and demanded lower gasoline prices. The higher refiners' profits climb, the greater the likelihood of increased government pressure on the industry.

So, what does this mean?

As long as supply constraints persist, refineries remain the primary beneficiaries of the energy crisis. This is where the highest margins in the global energy market are currently concentrated, making the shares of leading refining companies among the most attractive investments in the sector while shortages of refined fuels continue.

However, investors should not assume that today's extraordinary margins will last indefinitely. A full reopening of the Strait of Hormuz, the recovery of exports, and the normalization of global supplies could quickly narrow crack spreads. Additional risks include political pressure, potential export restrictions, windfall profit taxes, refinery maintenance, rising costs of heavy crude, and a slowdown in the global economy.

Nevertheless, the base-case scenario for the next two to three quarters remains favorable for refiners. Even if shipping through the Strait of Hormuz is only partially restored, the global shortage of refined petroleum products will not disappear overnight.

So we act wisely and avoid unnecessary risks.

Profits to y’all!