Global Fuel Stocks Hit Dangerously Low Levels

The constraint in the energy system lies in refining, a reality that Exxon CFO Neil Hansen suggests the market has largely ignored. Global refining capacity has effectively dropped by as much as 10% due to a confluence of geopolitical shocks, including conflicts in the Middle East and Ukraine, alongside export caps from China and Russia. As Rabobank strategist Joe DeLaura noted, diesel serves as the lifeblood of the industrial economy—fueling everything from agriculture to construction—and current supply routes from the Persian Gulf remain severely constricted.

Energy giants are operating at extreme limits to bridge the gap. Shell’s refineries hit 102% utilization in the second quarter, while Chevron and Exxon have pushed their facilities to 97% and 95% capacity, respectively. These levels are unsustainable long-term and leave little margin for error as the industry enters the autumn maintenance season. With global shock absorbers already depleted, the combination of harvest-related demand, early heating needs, and persistent regional conflict creates a perfect storm for the supply chain, signaling that the industry faces a long climb out of its current inventory hole.