CALGARY, Alberta (Sept. 16, 2026) — Enverus Intelligence® Research (EIR), a subsidiary of Enverus, the leading energy data analytics platform, has released a new analysis showing that oil and product markets may be pricing a faster recovery from war-related infrastructure damage than current repair timelines support.
Wars in Iran and Ukraine have damaged refining and export infrastructure, disrupted trade flows and contributed to unusually tight product markets. While forward curves largely price these disruptions as temporary, EIR finds that the physical recovery of damaged refining capacity could take considerably longer than the market currently implies.
Roughly 7 MMbbl/d of Middle Eastern and Russian refining capacity is damaged or constrained, excluding routine turnarounds from the approximately 11 MMbbl/d currently offline. At the time of writing, prompt refining margins reflect that shortage: the 3-2-1 crack is near $67/bbl, while the distillate crack is approximately $95/bbl, ranking in the top 1% of the past 16 years.
EIR believes futures pricing assumes a recovery that has not yet begun. Even if Russia-Ukraine hostilities ended immediately and no additional attacks occurred, current repair timelines suggest roughly half of severely damaged refining capacity could remain offline well into 4Q27. More severe refinery damage can require six to eight months to repair, while sanctions can further extend timelines for Russian facilities by limiting access to parts and technical expertise.
Absent an early end to both wars or a clear contraction in demand, EIR estimates that second-half 2027 cracks are more likely to remain around current levels for the 3-2-1 and distillate cracks. The report also notes that backwardated forward curves provide little incentive to hold products in storage, complicating the inventory rebuilding embedded in current market pricing.
“The market is pricing a fairly rapid normalization in refining capacity and product balances through 2027, but the physical recovery may take much longer. Even if hostilities were to end soon, repair timelines suggest a meaningful portion of damaged capacity could remain offline well into next year. With inventories still tight and forward curves offering little incentive to rebuild stocks, we think refining margins could stay elevated for longer than the strip currently implies,” said Al Salazar, report author and director at EIR.
Key takeaways:
- Approximately 7 MMbbl/d of Middle Eastern and Russian refining capacity is damaged or constrained, helping keep product markets historically tight.
- Even under an optimistic end-of-hostilities scenario, EIR estimates roughly half of severely damaged refining capacity could remain offline well into 4Q27.
- Without an early end to both wars or clear demand destruction, EIR sees second-half 2027 cracks to trade closer to current levels.
- Backwardated product curves provide little incentive to store barrels, creating an additional hurdle to the inventory rebuilding implied by forward pricing.
EIR’s analysis pulls from a variety of products including Enverus ONE™.
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About Enverus Intelligence® Research
Enverus Intelligence ® | Research, Inc. (EIR) is a subsidiary of Enverus that publishes energy-sector research focused on the oil, natural gas, power and renewable industries. EIR publishes reports including asset and company valuations, resource assessments, technical evaluations and macro-economic forecasts; and helps make intelligent connections for energy industry participants, service companies and capital providers worldwide. Enverus is the most trusted, energy-dedicated SaaS company, with a platform built to create value from generative AI, offering real-time access to analytics, insights and benchmark cost and revenue data sourced from our partnerships to 95% of U.S. energy producers, and more than 40,000 suppliers. Learn more at Enverus.com.
