Wall Street Sounds the Alarm: A Commodity Storm!

De-globalization is in full swing: In the era of globalization, production occurred where resource costs were lowest; goods were shipped to where demand was greatest; and inventories were shared globally—surplus regions supplied shortages. The world relied on low-cost cross-border logistics, free trade, and transnational investment to smooth out supply gaps and suppress commodity prices. Today, trade barriers, export controls, and localization of critical minerals have become the norm. The U.S., Europe, China, and Japan have all formulated their own critical mineral strategy plans—security, controllability, and self-reliance have replaced efficiency as top priorities. Policy uncertainty has risen across nations. Western countries have seized Russian assets and repeatedly used pretexts to seize Chinese investments. Mining and oil companies now hesitate to commit large-scale, long-term capital expenditures—and approach cross-border investment with extreme caution. Insufficient new capacity means inadequate buffers, rendering markets increasingly sensitive: even minor shocks trigger violent price swings. Supply chains are being forcibly restructured with built-in redundancy—pushing up costs across the entire value chain and demanding more physical inventory. Meanwhile, the African Union plans to establish a mineral resources alliance; four Latin American countries aim to form a copper-and-lithium alliance; and multiple nations are simultaneously implementing policies such as mandatory state ownership stakes, bans on raw mineral exports, and quota reductions—raising repeated red flags over the stable supply of physical resources! Geopolitical wars detonate bombs: If de-globalization is a slow knife—gradually eroding supply resilience while increasing demand for physical commodities—geopolitical conflict is the fuse that directly triggers “black swan” explosions disrupting production and transportation. A U.S.-Iran war would blockade the Strait of Hormuz—not only the world’s energy chokepoint, controlling 25% of global seaborne oil trade and 20% of liquefied natural gas (LNG), but also critical for 32% of global ammonia supply, 33% of seaborne urea, 45% of global sulfur exports, 31–45% of seaborne methanol, 25% of polyethylene/polypropylene, 50% of diammonium phosphate (DAP) and compound fertilizers, 30% of naphtha, and 11.8% of global electrolytic aluminum. Such a blockade would directly reshape the supply-demand balance for numerous commodities! Moreover, the “splash damage” from these “black swan bombs” is enormous. Houthi forces in Yemen have blockaded Saudi Arabia in the Red Sea; the Russia-Ukraine war has also shifted tactics—Ukraine uses long-range drones to strike Russian refineries and logistics hubs, while Russia blocks Ukrainian ports, halting grain exports. Refineries in the Middle East and Ukraine continue to be bombed, straining global refining capacity and sending refined-fuel profits skyrocketing! Goldman Sachs estimates that global refinery shutdowns currently exceed seasonal averages by 60%. The American Petroleum Institute estimates daily global crude processing has fallen by roughly 5 million barrels—about 5% of total global refining capacity. On September 1, U.S. diesel refining margins (the diesel crack spread) approached $107 per barrel—the highest on record. This figure normally stands around $20–$30. Trump urgently convened major refiners at the White House, vowing environmental waivers for small refineries and urging expanded capacity. Ocean shipping runs on diesel; long-haul land transport burns diesel; agricultural and industrial machinery relies on diesel; and winter heating still depends on diesel! Even the production and transportation of commodities—and energy itself—depend critically on diesel. For example, reduced Russian diesel exports have left Mongolia short of diesel, preventing coking coal transport to China—and triggering a sharp surge in coking coal prices. Soaring diesel costs inevitably push up the costs of energy, minerals, and agricultural products!

The Lucrative Refining Industry Amid the U.S.-Israel-Iran and Russia-Ukraine Wars

Document No.: A614/0663 Publication Date: July 28, 2026 The Lucrative Refining Industry Amid the U.S.-Israel-Iran and Russia-Ukraine Wars Disorder in crude oil supply and comprehensive attacks on Russian refineries have pushed refining crack spreads in Europe and the U.S. above $60 per barrel; refineries are operating at full capacity; and India is emerging as the world’s floating refining hub. Wang Nengquan Since its outbreak in February 2022, the Russia-Ukraine war has now lasted four years and five months; the U.S.-Israel-Iran war erupted on February 28, 2026, and remains in an intermittent ceasefire-and-combat state. As the former world’s largest energy exporter—and a pivotal global hub for oil and gas production, export, and international transportation—the combined impact of the Russia-Ukraine and U.S.-Israel-Iran wars has severely disrupted global oil and energy markets. As a crucial link in the petroleum value chain, the refining industry has entered a historic boom due to wartime supply chaos and direct attacks on refineries. India, seizing this opportunity, has transformed itself into the world’s floating refining producer. Record-High Refining Margins and Refinery Utilization Rates The U.S.-Israel-Iran and ongoing Russia-Ukraine wars have impacted global oil and energy markets in multifaceted ways. For the refining sector, the combined effect of these two conflicts since 2026 has been record-high refining profits and elevated refinery utilization rates. Industry expert Tsvetana Paraskova detailed these developments in two articles published on the website OilPrice.com on July 10 and 23, 2026. (I) Fuel Refining Margins Hit All-Time Highs Amid Tightening Markets During the week of July 10, 2026, gasoline and diesel refining margins surged to record highs, driven by renewed escalation in the Middle East, Russia’s ban on diesel exports, and persistently declining global fuel inventories. Although several million barrels of crude oil have recently successfully exited the Strait of Hormuz, the sharp rise in fuel refining margins—and widening spreads versus crude oil prices—indicate that global fuel markets remain extremely tight. On Wednesday, July 8, European diesel refining margins soared to a historic high exceeding $60 per barrel, following Russia’s announcement of a diesel export ban aimed at alleviating domestic fuel shortages caused by Ukrainian drone strikes on Russian refineries. According to data compiled by Reuters, the premium of European gasoline prices over crude oil reached a four-year high of $41 per barrel. The last time European gasoline commanded such a premium over Brent crude was during the summer of 2022—the initial phase of the Russia-Ukraine war. Meanwhile, the NYMEX 3-2-1 crack spread—a key indicator of U.S. refiners’ profitability—hit a record high of $64.58 per barrel on July 8. Refining margins continue rising due to export bans and refineries scrambling to process newly arriving crude from the Middle East. Furthermore, fuel inventories in many countries—including the U.S.—are at multi-year lows, further inflating refining margins and crude-oil price spreads. “European crack spreads have breached $60 per barrel; Brazil, Africa, and Turkey are fiercely competing to purchase substitute fuels from India, the Middle East, and the U.S. Gulf Coast; and U.S. diesel inventories have fallen to near five-year lows,” stated Sparta Commodities.

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