Gasoline Prices Rise: Why Refineries Are Raking In Record Profits 2026

Gasoline prices are rising, but the real winner in the current energy crisis is the refining industry. As conflict in the Middle East and global supply tensions push fuel costs higher, refineries are enjoying record margins and production levels.

While major oil companies have reported massive profits—over $90 billion this summer amid the Iran war—refineries are the less obvious beneficiaries. Their margins have skyrocketed, especially in Spain, which has the third-largest refining network in Europe.

Refining Margins Soar to Unprecedented Levels

In the third quarter of the year, Repsol's refining margin reached $36.2 per barrel, compared to an average Brent price of about $97 per barrel. This represents a 158% increase from the second quarter, when the margin was $14 per barrel.

Such figures are totally unexpected. The phenomenon is especially visible in Spain, where eight large-capacity refineries traditionally produce 13% of Europe's total refining output. In the last quarter, these plants have experienced a golden moment, more than quadrupling their refining margins.

Production and Profit Increases

According to El Economista, Repsol produced 574,000 barrels of oil equivalent between July and September. This represents a 2.9% increase compared to the previous quarter and a 4.2% increase year-on-year.

The surge in margins is not isolated to Repsol. Other refineries across Europe are also benefiting from the tight market conditions, driven by disruptions in global supply chains and increased demand for refined products.

Why Refineries Are Winning Big

The current situation is a perfect storm for refineries. Global refining capacity has been constrained due to maintenance and closures, while demand for gasoline and diesel remains strong as economies recover from the pandemic.

Additionally, the conflict in the Middle East has raised concerns about supply security, leading to higher crude oil prices. However, refineries can pass these costs onto consumers, often with a markup that expands their margins.

• Record margins: Refining margins have more than quadrupled in some cases, reaching levels not seen in years.
• Supply constraints: Global refining capacity is tight due to maintenance and closures, limiting supply.
• Strong demand: Post-pandemic economic recovery has increased demand for refined products.
• Geopolitical tensions: Conflict in the Middle East has raised crude prices, but refineries can pass costs to consumers.
• Spain's role: Spain's eight refineries make it a key player in Europe's refining landscape.

Impact on Consumers and the Economy

For consumers, the rising gasoline prices are a burden. In Spain, fuel prices have reached record highs, contributing to inflation and reducing disposable income. The government has implemented measures to mitigate the impact, but the relief is limited.

For the economy, high energy costs can slow growth and increase production costs across industries. However, for refineries and oil companies, the current environment is highly profitable, raising questions about windfall taxes and energy policy.

Comparison of Refining Margins

The table illustrates the dramatic increase in refining margins from the second to the third quarter. Such volatility is unusual and highlights the extraordinary market conditions. Context on how this played out before sits in Polar Ice Loss: 11.3 Trillion Tons Lost in 50 Years.

What to Watch Next

Several factors could influence refining margins in the coming months. The duration of the Middle East conflict, the pace of global economic recovery, and decisions by OPEC+ on oil production will all play a role. The background to this story is set out in Shell Refinery Profits Soar: $42 per Barrel Margin Forecast. A related thread runs through Refineries Eye Record Profits From Global Diesel Shortage.

Additionally, the transition to renewable energy and electric vehicles may eventually reduce demand for refined products, but in the short term, the refining industry remains a critical and profitable part of the energy sector. Earlier coverage in Russia Forced to Import Gasoline as Ukrainian Strikes Hit Refineries shows how the argument developed. A closer look at the same subject appears in Russia Forced to Import Gasoline After Ukrainian Strikes.

Investors and policymakers should monitor these developments closely, as high refining margins can lead to higher fuel prices and potential regulatory responses. Anyone following the wider picture can start with US May Lift Gas Rules This Summer to Slash Pump Prices. The same theme surfaces in Energy Utilities: latest articles, which takes a different angle.