Middle East Refinery Shutdowns and Restart Challenges - 2026 Iran War

On February 28, 2026, the United States and Israel launched coordinated airstrikes on Iran under Operation Epic Fury, triggering a full-scale regional conflict that has caused an unprecedented wave of refinery shutdowns across the Persian Gulf. Iranian retaliatory drone and missile strikes have targeted energy infrastructure in at least six countries, while the effective closure of the Strait of Hormuz has cut off the primary export route for roughly 20% of global seaborne oil trade and a fifth of global LNG supply. The scale of infrastructure disruption across the region is without precedent in modern energy history, and the technical constraints governing refinery operations mean that the path to recovery will be far longer and more complex than the initial shutdowns suggest.

Within the first 72 hours of the conflict, a cascade of refinery shutdowns spread across every major oil-producing state in the Gulf. On March 2, Saudi Aramco halted operations at the Ras Tanura refinery, the largest in the kingdom with a nameplate capacity of 550,000 barrels per day. Two Iranian drones were intercepted over the complex, but falling debris ignited a fire on site. Although the Saudi Defense Ministry characterized the damage as limited, Aramco took the precautionary decision to shut down the entire facility. Ras Tanura is not merely a refinery: it also houses Saudi Arabia's largest offshore crude loading terminal, making it a critical node for the kingdom's export commitments. A second drone attack on the facility was intercepted on March 4 without causing further damage, but the security threat prevented any restart. The nearby Juaymah LPG export plant also suspended shipments after structural damage to part of its delivery infrastructure.

In Kuwait, the Mina Al Ahmadi refinery, the country's largest with a capacity of approximately 346,000 bpd, reduced throughput after debris from intercepted projectiles fell on parts of the complex. By March 6, Kuwait announced a broader production shutdown driven not by direct damage but by a storage saturation problem. With the Strait of Hormuz closed and no alternative export route available, Kuwait's crude storage tanks were projected to reach full capacity within two weeks. The Wall Street Journal, citing data from energy analytics firm Kpler, reported that the UAE and Saudi Arabia faced similar storage constraints and would also need to curtail production if the blockade persisted.

Bahrain's sole refining facility, the Sitra refinery with a capacity of approximately 380,000 to 400,000 bpd, was struck by an Iranian missile on March 6. Social media footage showed the facility engulfed in flames. Despite the severity of the attack, initial reports indicated the refinery continued partial operations. However, Bahrain's complete dependence on this single facility means that any sustained damage would eliminate the country's entire domestic refining capacity. With sovereign debt already at approximately 150% of GDP, Bahrain's economic vulnerability to prolonged disruption is acute.

In the UAE, the Fujairah oil terminal on the eastern coast was hit by debris from an intercepted Iranian drone on March 3, causing a large fire and plume of smoke visible for kilometers. The following day, Jebel Ali Port in Dubai, adjacent to a condensate refinery and power generation facilities, was struck by debris from an intercepted Iranian missile. One berth caught fire, disrupting logistics at what is one of the world's largest man-made harbors. The Mussafah fuel terminal in Abu Dhabi was also hit by a drone on March 3. These strikes on UAE infrastructure are particularly significant because the country's pipeline to Fujairah had been seen as a potential bypass route around the Strait of Hormuz.

QatarEnergy, the world's largest LNG producer, suspended all operations at both Ras Laffan Industrial City and Mesaieed Industrial City on March 2, after Iranian drones targeted energy facilities at both sites. Qatar's Defense Ministry reported no casualties but acknowledged material damage. By March 5, QatarEnergy declared force majeure on gas exports, formally notifying buyers that contractual delivery obligations could not be met. The shutdown removed approximately 77 million tonnes of annual LNG production capacity from the global market, accounting for roughly 20% of world supply. Qatar also halted downstream production of urea, polymers, methanol, and aluminum at Mesaieed.

On the Iranian side, the damage has been equally devastating. US and Israeli strikes targeted Kharg Island, the offshore terminal in the northern Persian Gulf through which approximately 90% of Iranian crude exports flow. Explosions were reported on the island on February 28, the opening day of the conflict. Satellite imagery from March 2 showed at least one very large crude carrier still loading at a Kharg jetty, but no subsequent imagery has confirmed continued operations. Assessments from multiple sources suggest the terminal's loading infrastructure has been severely degraded, with Iranian crude exports dropping from roughly 1.7 million bpd to just over 100,000 bpd. Iranian refineries dependent on stable crude inflows via pipelines connected to Kharg are experiencing feedstock shortages. The Bandar Abbas refinery complex, processing up to 320,000 bpd of crude and condensate, and the Persian Gulf Star refinery, which processes condensate from the South Pars gas field, have both been forced to reduce throughput. The Abadan refinery, one of the oldest in the world with a capacity exceeding 500,000 bpd, is also operating well below capacity. Inside Iran, gasoline consumption already exceeds 90 to 100 million liters per day, far outstripping available refinery output even before the strikes.

Iraq, though not directly targeted by Iranian strikes on refineries, has been severely affected. With tankers unable to leave the Persian Gulf, Iraq began shutting down operations at the Rumaila oil field on March 3 because onshore storage was filling up. In the Kurdistan Region, energy companies including DNO, Gulf Keystone Petroleum, Dana Gas, and HKN Energy halted most production as a precaution. The region had been exporting approximately 200,000 bpd via a pipeline to the Turkish port of Ceyhan.

The technical reality of how refineries operate is central to understanding why this crisis will have such prolonged effects on global supply chains. A refinery is not a facility that can be dialed up or down like a thermostat. It consists of hundreds of interconnected pumps and thousands of kilometers of internal piping, all sized for specific hydraulic flow rates. If crude intake drops below a critical minimum, typically around 60% of the facility's nameplate capacity, pumps cannot maintain the pressure differentials required to move fluids through the system. At that point, the refinery faces a binary choice: operate at 60% or above, or shut down entirely to zero. There is no middle ground. This constraint means that a moderate reduction in crude supply does not produce a proportional reduction in refined output. Instead, it can trigger a complete shutdown once the minimum threshold is breached.

Bringing a shuttered refinery back online is a sequential, time-intensive process. The first step is heating the main furnace to operating temperature. Once the furnace is ready, operators begin filling the crude distillation unit (CDU) with crude oil and carefully raising temperatures through the column to achieve proper separation of hydrocarbon fractions. Only after the CDU is producing on-specification products, meaning the output meets quality and composition standards, can operators begin starting secondary processing units. These include the high vacuum distillation unit, the fluidized catalytic cracker (FCC), the hydrocracker (HCU), the visbreaker, and the coker. Each of these downstream units must individually reach steady-state conditions and produce on-specification output before the refinery is considered fully operational. Under normal conditions with no equipment damage, this full restart sequence takes between four and seven days. A controlled safe shutdown itself requires one to two additional days.

The financial and operational costs of each startup and shutdown cycle are substantial. Each cycle consumes significant amounts of fuel for furnace heating, requires full staffing of operational teams working extended shifts, and exposes both personnel and equipment to elevated risk. Thermal cycling stresses metallurgical components, accelerates fatigue in pressure vessels, and degrades catalyst beds in cracking units. For these reasons, the notion of running a refinery intermittently, operating for a few days then shutting down for five days to conserve crude stocks, is not feasible in practice. The cumulative cost, operational risk, and equipment degradation make such a pattern uneconomical and unsafe. Once a refinery shuts down, the rational decision is to keep it offline until operators are confident that crude supply will be stable and sufficient for continuous operations at or above the 60% minimum threshold.

The supply chain consequences of these combined shutdowns are cascading through global markets with increasing severity. Brent crude surged 28% in the first week of the conflict, reaching $92.66 per barrel by March 7. Analysts warn that prices could climb to $100 or beyond if disruptions persist, with some forecasts from Qatar's Energy Minister suggesting Brent could reach $150 per barrel in a prolonged scenario. European natural gas prices jumped over 60%, with Dutch TTF front-month futures hitting levels not seen since the 2022 energy crisis. Asian LNG prices rose more than 40%. South Korea, which imports 20% of its gas from the Gulf region, warned it could face LNG shortages within nine days. Japan requested emergency releases from strategic petroleum reserves, as its refiners depend on Gulf producers for approximately 95% of their crude supply.

China, the largest buyer of Gulf crude oil, instructed its top refiners to suspend fuel exports to preserve domestic supply. India is closely monitoring the situation given its heavy reliance on Gulf oil imports. In the United States, gasoline pump prices rose to $3.32 per gallon, an 11% increase in a single week and the highest level under the current administration. US chemical and fertilizer producers reported feedstock cost increases of 12 to 15%, threatening 2026 earnings.

The downstream effects extend far beyond energy markets. QatarEnergy's shutdown has halted production of urea, one of the world's most widely used nitrogen-based fertilizers, as well as methanol, polymers, and aluminum, at a critical moment ahead of Northern Hemisphere spring planting. Prolonged disruption in fertilizer supply could trigger crop yield reductions in South Asia and Latin America and contribute to food price inflation in late 2026. Petrochemical feedstock shortages are already affecting plastics, packaging, and chemicals manufacturing across Asia. EV battery components and semiconductors in transit through the Gulf are stranded. Central banks are modeling an additional 0.5 to 0.7 percentage points of core inflation from the combined energy price shock.

Even in an optimistic scenario where a ceasefire halts hostilities in the near term, the restart timeline for affected refining capacity will stretch over weeks to months. Facilities that sustained direct strike damage, such as the Sitra refinery in Bahrain and potentially Kharg Island infrastructure in Iran, will require physical repairs, safety inspections, and regulatory approvals before any restart sequence can begin. Refineries that shut down as a precaution, such as Ras Tanura, still face the four-to-seven-day restart window and will not resume until both crude supply and export route security are confirmed. The reopening of the Strait of Hormuz itself depends on military de-escalation, mine clearance operations if any were deployed, restoration of war-risk insurance coverage for vessels, and the willingness of commercial shipping operators to re-enter the corridor. Insurance and indemnity providers withdrew coverage from the strait as of March 5, making it economically impossible for ship owners to transit regardless of military conditions. The combination of minimum operating thresholds, lengthy restart procedures, insurance market constraints, and ongoing security uncertainty means that the millions of barrels per day of refining capacity taken offline during this conflict will return to the global market far more slowly than it was lost.