Goldman Sachs has projected that tighter petroleum product supply stemming from the Strait of Hormuz crisis will keep refining margins significantly elevated through 2026, according to a Reuters report citing the investment bank's commodity analysts. Diesel margins specifically are seen at between $19 and $26 per barrel higher than levels before March. The war in the Middle East has already pushed refiners' margins to two or three times the average for the 2013–2019 period.
Supply constraints are tightening the market for refined fuels. The disruption at the Strait of Hormuz, a critical chokepoint for global oil shipments, has reduced the flow of crude and products, squeezing available diesel and gasoline inventories. This supply-demand imbalance is the primary driver behind the sustained margin outlook.
Infrastructure and investment dynamics are shifting in response. Refiners are likely to see stronger cash flows, potentially accelerating capacity expansions or maintenance projects. However, the note did not specify capital expenditure plans, and the elevated margins could also incentivize alternative fuel switching among industrial users.
Geopolitical risks remain the core catalyst. The Strait of Hormuz crisis, tied to the broader Middle Eastern conflict, underscores the vulnerability of global energy trade routes. Any further escalation could deepen the supply crunch, while a de-escalation might rapidly unwind the margin premium. OPEC's spare capacity and strategic reserves offer limited buffer given the specific product supply nature of the disruption.
Some analysts contend that high margins could accelerate refinery restarts and new builds globally, potentially capping upside. And if geopolitical tensions ease faster than expected, the premium might collapse more quickly than Goldman's base case assumes.