Brent crude oil futures settled at $94.40 per barrel on Wednesday, the fifth consecutive close above $90, and traded as high as $95.10 in overnight Asian dealings as the International Energy Agency confirmed in a fresh assessment that approximately 1.6 million barrels per day of refining capacity in the Middle East remains offline as a direct result of the Iran-led regional conflict that began February 28. WTI crude settled at $90.85.
The IEA short-term assessment, published in Paris Wednesday afternoon, attributed approximately 940,000 b/d of the impaired capacity to Iranian Bandar Abbas and Abadan refineries directly affected by Israeli strikes, with an additional 660,000 b/d offline at Iraqi facilities (Baiji, Doura) where Iran-backed militia attacks have prevented restart. The Strait of Hormuz remains technically open, but war-risk insurance premiums on VLCC tanker transits have risen to $480,000 per voyage from $95,000 pre-war.
Crack Spreads Blow Out
The simultaneous decline in regional refining capacity and continued global product demand has driven gasoline crack spreads in Northwest Europe to $32.80 per barrel — the highest since the 2022 Ukraine-related disruption — while distillate (gasoil/diesel) cracks reached $39.40, up from a Q1 average of $19.20. U.S. RBOB gasoline futures traded at $2.84 per gallon at the front, implying a national retail average of around $4.20 per gallon for the Memorial Day driving season.
Shipping rates have also responded: VLCC rates on the Middle East-to-Asia route are at $155,000 per day, up 320% from pre-war averages. The Frontline (FRO) and Euronav (CMBT) tanker stocks have outperformed the MSCI World Energy Index by approximately 24 percentage points year-to-date. Aframax tanker rates in the Mediterranean have risen 180% as European refiners seek alternative crude routings.
Equity and Rates Spillovers
U.S. integrated energy stocks gapped higher in pre-market: Exxon Mobil (XOM) +1.6%, Chevron (