Why It's so Hard to Recover the World's Lost Fuel Supplies

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President Trump has been grasping for ways to lower fuel prices ahead of next week's midterm elections. The problem: His diesel deal with Russia and other recent moves will barely make a dent in recovering the world's lost fuel supplies.

Drones buzzing from Ukraine and long-range missile strikes out of Iran and Yemen have crippled dozens of oil refineries in Russia, Saudi Arabia, Kuwait and the United Arab Emirates. In all, nearly 12% of the world's refining capacity for making gasoline, diesel and other fuels is offline, according to market intelligence firm Industrial Info Resources, or IIR.

"You don't need to kill the enemy's entire military, you just need to deprive it of fuel," said Jim Krane, an energy specialist at Rice University's Baker Institute for Public Policy in Houston. "It's a key warfighting strategy."

In all, Ukraine has taken out 59% of Russia's fuel-making capacity, according to IIR. Before the strikes, the country was one of the world's top suppliers of diesel, accounting for roughly 10% of the global market, but Moscow suspended exports in July to protect its domestic supplies.

Trump has repeatedly blamed Ukraine's attacks on Russian oil refineries for high fuel prices, while playing down the impact of the conflict in the Middle East that halted oil-tanker traffic through the vital Strait of Hormuz until recent weeks.

U.S. military escorts have recently allowed more oil traffic to move through the Persian Gulf than before the conflict, White House spokeswoman Taylor Rogers said.

"As the President has said many times, today's high oil prices reflect pre-existing issues: years of Democrat policies that shuttered U.S. refineries, compounded by the destruction of refineries in the Russia-Ukraine war -- a conflict he inherited," Rogers said.

Trump has suggested that the U.S. will resume attacks on Iran following the midterms. Iran would likely escalate strikes on oil-and-gas infrastructure in the region in return, said David Goldwyn, head of Goldwyn Global Strategies and a former Obama administration official.

"It doesn't look good in the Gulf," he said. "There could be decreased output and longer outages depending on the level of damages."

The situation is dire in Saudi Arabia, which has seen a roughly 25% drop in its oil refining capacity because of attacks and logistical bottlenecks, IIR data show. The refineries are expected to take months to repair.

"Pipelines can be repaired and restored pretty quickly, but refineries and petrochemical facilities are just big, complex places and they can't be fixed right away," said Ben Cahill, a nonresident senior fellow at the Atlantic Council.

In the weeks ahead of the midterms, the Trump administration has explored ways to ease pressure on congressional Republicans who are facing tight races partly because of the high fuel costs that are driving inflation.

After opting not to implement his own diesel-export ban, Trump struck a surprise deal with President Vladimir Putin that would lift sanctions to allow Russia to export hundreds of thousands of tons of diesel. Although the agreement marks a major U.S. foreign policy shift, energy analysts say its impact on the market will likely be minimal.

If Russia could export what it promised, it would merely be moving fuel from its domestic market, rather than boosting supplies, because its remaining refineries are already running at full tilt, analysts say. Diesel futures are little changed from Oct. 9, when Trump announced the deal.

U.S. oil industry executives didn't advocate for a diesel deal with Russia, according to people close to the industry. They offered a different idea to the administration last month: ask China to boost refinery output.

Refinery runs there are 12% lower than before the war, according to analytics firm Rystad Energy. That suggests China has extra capacity that could ease the world's diesel shortfall, which Rystad pegs at about 2 million barrels a day.

Even though the modalities of war have changed, crippling oil refineries isn't a new wartime strategy for the U.S. or its allies. During World War II, Allied forces took to the skies to bomb many of Germany's oil refineries, grounding Nazi fighter planes and dealing a devastating blow to Adolf Hitler's tanks and ground troops in Europe.

While Ukraine has focused its strikes on military and economic assets, international bodies have accused Russia, which invaded its southwestern neighbor in 2022, of intentionally targeting civilians and their energy infrastructure. Most recently, Moscow attacked Ukraine's electrical grid, destroying 28 critical substations and leaving 550,000 households without power ahead of winter.

The U.S. is exploring other ways to try to ease fuel prices. Among them is invoking the Cold War-era Defense Production Act to spend up to $150 million to expand refining capacity. Any investments, though, could take years to bear fruit given the complexities of refining facilities and the logistics of supplying them with crude. Typically, big upgrades for large refineries cost multiple billions of dollars.

During a trip to India last week, Secretary of State Marco Rubio spoke with foreign minister Subrahmanyam Jaishankar about boosting refined-product exports, according to people close to the two governments. Administration officials have made similar requests of Greek refiners.

Neither country is in a position to help much. Indian refineries are running near full capacity, and Greek petroleum exports make up a sliver of the global market.

"Someone asked me if Trump was throwing a Hail Mary pass. My reaction is, he's throwing the ball way out of bounds and saying, 'Well, at least I tried,'" said Ed Chow, nonresident senior fellow at the Center for Strategic and International Studies.

 

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