Middle East refining under pressure as damage and export disruptions slow recovery

in Oil & Companies News 01/09/2026

Middle Eastern refinery runs remain significantly below pre-war levels at about 7.3 million barrels per day (mbd), compared with 9.9 mbd in February 2026, reflecting a combination of physical refinery damage and constrained product evacuation through the Strait of Hormuz (SoH). Looking ahead, a gradual recovery is expected from Q4 2026, but a return to pre-war throughput is unlikely before Q2 2027.

Near-term recovery is a logistics story; full normalisation is a capacity restoration story.

Middle Eastern refinery runs began to recover in May, but renewed regional tensions and the effective closure of the Strait of Hormuz (SoH), followed by disruptions around Bab el-Mandeb (BeM), have interrupted that recovery since then. Run losses have been substantially larger than the amount of refining capacity directly taken offline, as refineries that remain operational have also reduced throughput to manage rising product inventories amid restricted export flows. That makes the recovery path dependent not only on repairs, but also on whether products can move out of the region efficiently enough to allow plants to run at higher rates.

The base case assumes prolonged disruption, with transit remaining constrained through the rest of 2026 before a gradual reopening begins only in late Q4. Regional refinery runs have so far moved broadly in line with that prolonged-conflict scenario. An improvement in Hormuz transit could therefore trigger a relatively quick initial rebound as operational refineries raise throughput and product evacuation normalises.

After that first rebound, damaged capacity is expected to become the main constraint. Restoring heavily affected sites requires work across processing units, power systems, utilities and supporting infrastructure, while certain process equipment will need lengthy repairs or replacement. As a result, Q4 recovery is expected to be primarily logistics-led, with the return of damaged capacity shaping the recovery afterward and keeping a full return to pre-war throughput constrained until Q2 2027.

The Middle East has lost around 4 mbd of refined product supply since the start of the conflict.

The impact goes beyond refinery throughput alone. Between March and August, the Middle East lost about 4 mbd of refined product supply relative to pre-conflict levels. Roughly 2.5 mbd of that decline reflects curtailed refinery output, while the remaining approximately 1.5 mbd comes from other regional supply streams, primarily LPG and NGL-derived naphtha. For refiners and fuel markets in the region, that split underscores that the constraint is not just crude processing capacity, but also the ability to maintain flows across the wider product system.

Refinery damage and export constraints are leaving recovery uneven across the Middle East.

The disruption varies significantly by country. Saudi Arabia, Kuwait and Bahrain combine substantial physical damage with some of the largest run losses, while the UAE and Iran remain more heavily constrained by product evacuation. Qatar faces a longer recovery following damage to Pearl GTL, while Oman stands apart, with its location outside Hormuz allowing runs to remain near capacity.

Source: Kpler