For the Love of Money – The Factors Keeping Refined Product Prices High, Even as Crude Prices Fall

Refined product prices have remained elevated this summer even as crude oil prices have fallen from their 2026 highs set just a few months ago. While several factors are contributing to the differential trends between crude and product prices, the overwhelming reason is that global supply and demand is much tighter in product markets than crude markets. In today’s RBN blog, we’ll discuss the main drivers behind the seeming disconnect between the two.

This is the latest blog offering insights from our newly released Future of Fuels report. In Waiting on the World to Change, we discussed our forecasts for lower global crude oil prices and a potential rollback in U.S. production in the next few years. More recently, Go With The Flow took a look at some of the key developments — including the Strait of Hormuz closure, U.S. intervention in Venezuela, and plans for a new wave of refined-product pipelines into the West Coast — that have already shaken up the market in a big way, with more changes likely to come.

(Crude oil and refined products are major components of our upcoming School of Energy: Fundamentals, a two-day conference designed to help professionals build their understanding of energy markets, from production and infrastructure to exports, pricing and end-use demand. The conference is September 9-10 in Houston and the early-bird rate, a $500 discount, expires August 12. Click here to learn more.)

As noted in the introduction, the biggest factor keeping product prices elevated this year has been the emergence of a refined product shortage. The most important drivers have been the disruption of normal vessel traffic through the Strait of Hormuz, damage inflicted on refineries in the Persian Gulf region, and the similar severe degradation of Russian refining operations by accelerated and more effective Ukrainian drone strikes. Contributing to these global product shortages are Chinese policies limiting product exports, a lack of new refining capacity coming online, and the impacts of a number of permanent refinery shutdowns over the past 18 months. Within the U.S. in particular, regulatory policies that have pushed Renewable Identification Number (RIN) prices to record levels have added to the high product prices. We’ll look at each of these drivers in turn, beginning with the Strait of Hormuz, and also provide some takes on longer-term refining prospects.

The closure of the Strait of Hormuz has had a major impact on markets by removing significant volumes of exportable barrels from an already tight market. As shown in Figure 1 below, refined product exports from Persian Gulf countries (excluding Iran) collapsed from more than 3.3 MMb/d in 2025 to just over 1 MMb/d by April, a loss of more than 2 MMb/d. The decline is concentrated in clean products such as diesel (green bar segments), jet fuel (red bar segments) and gasoline (blue bar segments), which have tightened global supply and kept margins elevated. If operations remain severely limited, the squeeze will continue to be felt most acutely in these products. The disruption is not solely the result of shipping constraints. Iranian strikes have also inflicted significant damage on several of the region’s largest refineries, limiting their ability to produce exportable fuels even as shipping routes gradually reopen.