Editor Rene Gonzalez editor@petroleumtechnology.com tel: +1 713 449 5817 Managing Editor Rachel Storry rachel.storry@emap.com Sub-Editor Lisa Harrison lisa.harrison@emap.com Graphics Peter Harper Business Development Director Paul Mason Paul.Mason@petroleumtechnology.com tel: +44 7841 699431 Managing Director Richard Watts richard.watts@emap.com Circulation Fran Havard circulation@petroleumtechnology.com EMAP, 10th Floor, Southern House, Wellesley Grove, Croydon CR0 1XG tel +44 208 253 8695 Register to receive your regular copy of PTQ ptq PETROLEUM TECHNOLOGY QUARTERLY Vol 31 No 4 Q3 (Jul, Aug, Sep) 2026
Where there’s a will, there’s a way W orld oil stockpiles are approaching historically low levels following the clo- sure of the Strait of Hormuz (SoH), exposing structural vulnerabilities in global refining systems. About one-fifth of globally traded crude oil and significant volumes of liquefied natural gas ( LNG) normally transit the waterway, making prolonged disruption difficult to offset s olely through inventory drawdowns. This supply imbalance affects refining regions from Asia to the US West Coast, where many facilities are engineered for specific crude slates and cannot rapidly substitute feedstocks without yield penalties, instability, or higher hydrogen consumption. For now, Saudi Arabian and Iraqi crude exports through the SoH remain largely inaccessible. Iraq alone exported roughly 10 million barrels through the strait in April, volumes that historically supplied refineries configured for medium and heavy sour crude processing. Numerous Asian refineries invested billions in high- complexity conversion units to economically process heavier, higher-sulphur crudes. Replacing these feedstocks with lighter sweet crudes often results in lower middle distillate output, altered vacuum residue balances, and reduced utilisation of upgrading units, undermining refinery economics despite potentially lower sul - phur handling requirements. According to the US Energy Information Administration, China previously imported approximately 1.1 million BPD of Iraqi crude, while India imported roughly 0.9 million BPD. The loss of these volumes introduces competition for alternative supply streams from West Africa, Latin America, and the Atlantic Basin. Analysts at Goldman Sachs recently noted that “the speed of depletion and supply losses in some regions is concerning, with the more easily accessible refined products buf - fers approaching very low levels fast”. The concern extends beyond crude availability to refined-product inventories, particularly diesel, jet fuel, and marine fuels. Once inventories decline below opera- tional minimums, price volatility can accelerate disproportionately due to precau- tionary purchasing and supply-chain hoarding behaviour. The SoH disruption has also changed global product trade routes. Jet fuel cargoes are increasingly mov- ing from Nigeria to European markets, while Australian importers have reportedly sourced aviation fuel from Texas refineries. Longer voyages increase freight costs, tie up tankers, and elevate insurance premiums associated with geopolitical risk. These logistics constraints contribute to sharply higher delivered aviation fuel prices, with some destination costs approaching $1,400 per metric ton in late May compared with levels observed in mid-March. Refiners may respond by maximising middle distillate production through operational optimisation or capital projects. Potential strategies include increasing hydrocracker catalyst activity manage- ment, debottlenecking hydrogen networks, or upgrading two-stage hydrocrackers to enhance jet fuel and diesel yields from vacuum gas oils. Refineries with access to alternative crude sources are reporting elevated utilisation rates, although profit - ability has not always matched the strong crack spreads seen in 2024. Increased throughput also raises utility demand for steam, cooling water, and hydrogen. While it is difficult to predict the end of the Persian Gulf crisis, Global Research (www.globalresearch.org) reported in mid-May that Iraq has announced a major new oil discovery near the Saudi border. This comes as Baghdad faces one of its most severe energy and economic crises due to the disruption of Gulf export routes. Instead of waiting for the SoH to open up again, the Iraqi government is considering reviving the historic Iraq-Saudi Arabia oil pipeline, which links Zubair in southern Iraq to the Saudi Red Sea port of Yanbu. As they say, where there’s a will, there’s a way! Rene Gonzalez
PTQ (Petroleum Technology Quarterly) (ISSN No: 1632-363X, USPS No: 014-781) is published quarterly plus annual Catalysis edition by EMAP and is distributed in the US by SP/Asendia, 17B South Middlesex Avenue, Monroe NJ 08831. Periodicals postage paid at New Brunswick, NJ. Postmaster: send address changes to PTQ (Petroleum Technology Quarterly), 17B South Middlesex Avenue, Monroe NJ 08831. Back numbers available from the Publisher at $30 per copy inc postage.
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PTQ Q3 2026
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