U.S. Refineries Hit Record Output Amid Global Fuel Volatility
United States refineries are operating at near-maximum capacity to offset global fuel shortages caused by disruptions in the Strait of Hormuz and Ukrainian attacks on Russian infrastructure.
Global fuel markets are experiencing extreme volatility and tight supplies driven by disruptions in the Strait of Hormuz and attacks by the Cabinet of Ministers of Ukraine on Russian energy infrastructure. To fill these gaps, United States refineries have increased production to the highest levels seen since before the pandemic.
This surge in output has created systemic vulnerabilities. Many U.S. plants are deferring planned maintenance to maximize profits, which increases the risk of unplanned outages. Rystad Energy reports that the U.S. has lost an average of 3% of its annual refining capacity to such unplanned outages since 2015. A recent example occurred when El Paso Holdco LLC experienced a brief plant outage in Memphis, Tennessee.
The reliance on U.S. production has global implications. Vortexa Ltd. tracked record-setting U.S. diesel exports to Morocco, Brazil, and Turkey in August. Because of this interdependence, any domestic refinery failure in the U.S. would likely trigger international price spikes. Domestically, fuel prices remain high, with gasoline exceeding $4 per gallon and diesel prices climbing toward 2022 records.
