15th July 2026
The latest wave of U.S.–Israel strikes on Iran and Iran’s broad retaliation across the Gulf has triggered one of the most serious disruptions to Middle Eastern refining capacity in decades. Multiple refineries, gas‑processing plants, and petrochemical hubs have been damaged or forced offline.
This matters because refineries, not oil wells, determine the supply of usable fuel: diesel, petrol, jet fuel, heating oil, and petrochemical feedstocks.
Below is a comprehensive breakdown of what has shut down, why it matters, and how it affects global markets.
What has been hit: the major refinery shutdowns
The conflict has caused widespread damage across the Gulf’s refining network — especially in Saudi Arabia, Kuwait, Qatar, Bahrain, and the UAE.
Saudi Arabia
Saudi Arabia has the region’s largest refining system, and several facilities have been disrupted:
Yanbu — intermittent shutdowns due to drone and missile strikes
Ras Tanura — temporary suspension of operations after nearby attacks
Jubail — reduced throughput due to damage to associated petrochemical units
Saudi Arabia normally exports millions of barrels per day of refined products; even partial outages tighten global supply.
Kuwait
Kuwait’s refining sector has been hit hard:
Al‑Zour refinery — one of the largest in the world, forced into partial shutdown
Mina Abdullah — damaged auxiliary units
Mina Al‑Ahmadi — reduced operations due to infrastructure strikes
Kuwait is a major supplier of diesel and jet fuel to Asia and Europe, so outages ripple globally.
Qatar
Qatar’s refinery and LNG infrastructure have suffered significant damage:
Ras Laffan — gas‑processing units hit, affecting condensate and refined product output
LNG trains — multiple units offline, reducing exports by billions of dollars annually
Qatar’s condensate refineries feed Asian petrochemical markets; shutdowns tighten plastics, solvents, and chemical supply chains.
Bahrain
Bahrain’s Sitra refinery — the country’s main refining asset — declared force majeure, meaning it cannot meet contractual obligations.
This is one of the clearest signs of severe disruption.
United Arab Emirates (UAE)
The UAE has seen:
Ruwais refinery — reduced operations after nearby strikes
Jebel Ali — disruptions to storage and export terminals
The UAE is a major exporter of aviation fuel; disruptions affect global jet fuel markets.
Why refinery shutdowns matter more than oil production cuts
Oil wells produce crude.
Refineries produce usable fuel.
When refineries shut down:
Petrol and diesel supplies tighten
Jet fuel prices spike
Petrochemical feedstocks become scarce
Shipping and aviation costs rise
Inflationary pressure increases globally
Even if crude oil is still being pumped, it cannot be used without refining capacity.
This is why refinery outages often cause sharper price movements than upstream disruptions.
Market impact: rising prices, but slower than expected
Despite the scale of the damage, global oil prices have risen less sharply than analysts predicted.
Brent crude has:
Surged above $85
Seen intraday spikes toward $86–87
Stabilised in the $82–84 range depending on daily news
Given the refinery shutdowns and threats to the Strait of Hormuz, many expected prices to push toward $100.
But one major factor is slowing the rise:
China’s massive oil reserves are dampening global price pressure
China is the world’s largest oil importer. Its behaviour shapes global prices.
Right now, China is acting as a stabiliser because:
1. China’s crude imports have collapsed
Imports fell sharply year‑on‑year, reaching the lowest levels since 2016.
China is not competing aggressively for Middle Eastern barrels.
2. China is relying on huge strategic reserves
China has spent years building one of the world’s largest oil stockpiles.
With weak domestic demand, it can draw on reserves instead of buying expensive crude.
3. Refinery utilisation in China is at a 10‑year low
Less refining means less crude demand — reducing global pressure.
4. China’s economy is slowing
Lower industrial activity reduces fuel consumption.
Result:
Even with Middle Eastern refineries offline, China’s reduced demand is preventing a global price spike.
What happens next?
The outlook depends on three factors:
Whether the Strait of Hormuz remains open
Whether China’s demand rebounds
Whether U.S.–Israel or Iran escalate further
If China’s demand rises while Middle Eastern refineries remain offline, prices could surge sharply.