The oil refining industry’s windfall profits amid the U.S.-Israel-Iran tensions and the Russia-Ukraine war

Ukrainian drone strikes have forced Russia to halt exports of refined products. The war between Russia and Ukraine, which erupted in February 2022, has entered its fourth year. Since the beginning of 2026, Ukraine has conducted long-range drone attacks on Russian refineries, severely disrupting oil product supplies both domestically and internationally. On July 15, 2026, industry expert Juliane Geiger published an article on the website OilPrice.com detailing this situation. Geiger noted that Ukrainian drone strikes have paralyzed Russia’s refining sector: repeated attacks on multiple large-scale refineries have driven Russia’s crude oil processing volume to its lowest level since 2005. These strikes have triggered fuel shortages and export bans, compelling Moscow to suspend exports of gasoline, jet fuel, and diesel—while simultaneously increasing fuel imports to meet domestic demand. This disruption is tightening the global diesel market, pushing up refining margins and prices, as importers seek alternative supplies from the United States, India, and the Middle East. Since March 2026, Ukraine has systematically targeted Russia’s refining industry, reducing its crude processing levels to the lowest in 21 years and forcing Moscow to ban exports of gasoline, jet fuel, and diesel. According to Bloomberg, citing data from Energy Aspects, Russian refineries averaged 3.91 million barrels per day (bpd) of crude processing in early July 2026—over 1.4 million bpd less than the same period last year—and the lowest daily average since March 2005. Within the past 100 days, Ukraine has launched approximately 50 drone strikes against at least 24 of Russia’s 34 major refineries. The Ukrainian strike on July 6, 2026, against the Omsk Refinery destroyed the final geographical safe haven for Russia’s refining industry. Located over 2,000 kilometers from the front line, the Omsk Refinery processed approximately 22 million tons of crude oil in 2024, making it Russia’s largest refinery. Reports indicate the attack damaged the ELOU-AVT-11 unit—a crude distillation unit capable of processing 8.4 million tons of crude oil and 1.2 million tons of condensate annually—enabling the refinery to receive crude and separate it into usable feedstocks. A second major primary unit, AVT-10, was also damaged. (1) Sequential Ukrainian attacks on Russian refining enterprises in 2026 The Saratov Refinery ceased operations after being struck in March 2026. Kirishi Refinery—one of Russia’s largest refineries located in its European territory—suffered capacity damage following attacks in March and May 2026. The Norsy Refinery in Kstovo endured multiple strikes, including reported damage to its No. 1 primary processing unit. Moscow Refinery sustained repeated strikes in June and may remain shut down until the end of 2026. Refineries in Syzran, Novokuybyshevsk, Volgograd, Ryazan, TANECO, Ilysk, Afipsky, and other refineries under Bashneft Group were all attacked. In the night of July 14, 2026, Ukrainian drones struck the Afipskoye Refinery in Russia’s Krasnodar region—one of the key refining centers along the Black Sea coast. Simultaneously, Ukraine targeted Gazprom Neftekhim Salavat, one of Russia’s largest integrated refining and petrochemical complexes located in Bashkortostan and owned by Gazprom.

Chemical Industry Update: The End of Europe’s ‘Golden Age’ of Refining and Petrochemicals—A Wave of Closures; China, India, and the Middle East Lead Global Refining & Petrochemical Restructuring

On October 6, INEOS announced it would shut down two critical units at its Rheinberg site in Germany, eliminating approximately 175 jobs. These units primarily produce epichlorohydrin (a core raw material for epoxy resins), chlorine, and caustic soda. On October 7, INEOS issued another announcement stating it would cut 20% of the workforce at its acetyl plant in Hull, UK—the largest production base for acetic acid and acetic anhydride in the UK-EU region. Additionally, INEOS plans to shut down its phenol plant in Gladbeck, Germany (650,000 tons/year phenol, 409,000 tons/year acetone); close its propylene oxide and propylene glycol production facilities in Cologne, Germany; and withdraw from relevant working groups of the European Chemical Industry Council (CEFIC) in 2026. In early October, ExxonMobil officially announced the suspension of two chemical recycling projects—in Antwerp, Belgium, and Rotterdam, the Netherlands—with a combined investment of €100 million. Once a major participant in the European petrochemical market, ExxonMobil previously sold parts of its polyolefins business in Europe (primarily in the UK and the Netherlands) to INEOS, significantly scaling back its downstream petrochemical footprint in the region. In April 2024, ExxonMobil announced the permanent shutdown of its ethylene steam cracker and associated facilities in Gravenchon, France, with a capacity of 425,000 tons/year. In March, Shell announced it was exploring strategic partnerships in the United States while planning to close certain European plants—including its ortho-/para-xylene assets in Wesseling, Germany, and its methyl ethyl ketone (MEK) facility in Pernis, the Netherlands. In July 2025, the company upgraded its “scope assessment” to a formal “exit plan,” deciding to shut down its aromatic and olefin units at the Rheinland integrated refining and petrochemical complex in Germany, as well as portions of its olefin and derivative units at Moerdijk, the Netherlands. It plans to phase out the cracker unit at Mossmorran, UK, between 2026 and 2027. BP has sold all its European petrochemical assets to INEOS, completely exiting Europe’s traditional basic chemical industry and markets. BP also plans to cut one-third of the capacity at its Gelsenkirchen plant. Meanwhile, Livorno in Italy has suspended crude oil processing, and Grangemouth in the UK may also face closure. LyondellBasell, between March 2024 and June 2025, implemented a series of exit measures, intending to sell four of its European olefin and polyolefin assets and related businesses to AEQUITA. The transaction is expected to be completed in the first half of 2026. SABIC announced the closure of its 575,000-ton-per-year steam cracker at its Geleen plant in the Netherlands. It also permanently shut down Olefin VI—the ethylene steam cracker at Wilton, Teesside, UK—with an ethylene capacity of 865,000 tons/year, which has remained idle since its maintenance shutdown in October 2020. Dow announced in July 2024 the closure of three chemical plants in Europe and will announce additional shutdown plans in Q4 2025, including halting a chemical recycling project in Böhlen, Germany, with an investment exceeding $100 million.

Europe's Defence Spending Props Up Shrinking Refining Sector, Says VAROPreem CEO

16 hours ago

European Union defense spending surged 75% since 2021, bolstering fuel demand amid a shrinking refining sector, according to VAROPreem CEO Dev Sanyal. Rising diesel prices reflect geopolitical tensions as governments prioritize energy resilience over previous closure trends.

reuters

2026-10-01

Europe's Defence Spending Props Up Shrinking Refining Sector, Says VAROPreem CEO

Europe's Defence Spending Props Up Shrinking Refining Sector, Says VAROPreem CEO

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