The disruptions forced international buyers to seek alternative sources of petroleum products, which increased demand for US refinery output. As a result, US refinery margins, production, and exports all increased during the period.

Crude Oil Prices and Inventories

Brent crude oil prices fluctuated significantly during the second quarter of 2026, reaching a high of $118 per barrel on April 29 before falling to a low of $72 per barrel on June 26.

At the beginning of the quarter, Brent crude oil prices were above $100 per barrel as disruptions in crude oil shipments through the Strait of Hormuz reduced global access to oil supplies. Several Middle Eastern countries also reduced or temporarily halted crude oil production due to uncertainty in the region.

Concerns over when shipping traffic through the Strait of Hormuz would resume caused major price volatility during April and May. The average daily movement in Brent crude oil prices reached $4 per barrel, compared with $1 per barrel during the same months in 2025.

Between May 18 and June 17, negotiated ceasefires and expectations of renewed shipping activity through the Strait of Hormuz contributed to a decline in Brent crude prices by more than $1 per barrel per day on average.

On June 17, the United States and Iran signed a Memorandum of Understanding (MOU), which included efforts to restore shipping traffic through the Strait of Hormuz. Following the agreement and an increase in crude oil tanker movements through the waterway, Brent crude prices continued to decline during the rest of the quarter.

However, prices increased again during the first two weeks of the third quarter after renewed military strikes and uncertainty surrounding the agreement.

Despite falling crude oil prices, global crude oil inventories declined sharply during the second quarter. The US Energy Information Administration estimated that global crude oil inventories fell by 5.1 million barrels per day during 2Q26.

US commercial crude oil stocks also declined, falling from above the seasonal five-year average at the start of the quarter to their lowest seasonal level since 2014 by the end of the quarter. Record crude oil exports and high refinery operations were key factors behind the decline.

Refinery Margins

US refineries operated at unusually high levels during the second quarter of 2026, processing the highest amount of crude oil for any second quarter since 2019, despite refining capacity being 4% higher at that time.

Strong demand for transportation fuels supported higher refinery margins. Profit margins for gasoline, diesel, and jet fuel increased significantly due to tight international supplies.

The average quarterly gasoline crack spread increased by 60% compared with the same period last year, while diesel and jet fuel margins more than doubled due to reduced global supply.

Petroleum Product Exports

US exports of diesel and jet fuel reached record levels in the second quarter as disruptions through the Strait of Hormuz tightened global refined fuel markets.

US distillate exports averaged an estimated 1.56 million barrels per day during 2Q26, which was 30% higher than the five-year average. Jet fuel exports averaged 356,000 barrels per day, more than double the five-year average.

Compared with the first quarter of 2026, US diesel shipments increased to all major export markets. Jet fuel exports rose significantly to Europe, while remaining relatively stable for most other destinations.

Higher global demand to replace lost jet fuel supplies also encouraged some US refineries to adjust production and increase jet fuel output for exports.

Refineries can modify their production levels by changing processing methods and the types of crude oil they use. While US refineries generally prioritize gasoline production to meet domestic demand, market conditions in the second quarter led to a shift toward jet fuel production.

Jet fuel production in the United States was estimated to be 24% higher than the five-year average due to increased refinery activity and higher jet fuel yields. Distillate production increased by 5%, while motor gasoline production rose by only 1% during the same period.