When Iran closed the Strait of Hormuz at the end of February, the world relearned a lesson it keeps forgetting: crude oil, by itself, moves nothing. Trucks, tractors, aircraft, and ships run on diesel, gasoline, jet fuel, and bunker fuel – transportation fuels that exist only after crude oil has passed through a refinery.
Asia felt the shock first. As crude supplies tightened, Asian refiners cut throughput and some curbed transportation fuel exports to protect their own markets. Even after the April ceasefire, tanker traffic through the strait remained far below pre-war levels.
Seven months later, Gulf crude exports are recovering, though many shipments now travel longer and costlier routes.
Diesel is not recovering. In August, Gulf diesel exports were barely one-quarter of pre-war levels, as refineries damaged in the war remained offline. In Russia, Ukrainian drone strikes have forced half of the country’s six largest diesel refineries to cut or halt output, and Moscow has banned diesel exports. In February, the Gulf and Russia together supplied nearly half of the world’s seaborne diesel. A damaged diesel unit cannot be replaced quickly, and the diesel capacity lost to war and refinery closures may take years to replace.
The ripple reached California. The state has spent years making refining harder. Two refineries have recently closed, and more of the remaining seven are expected to follow. The gap is filled by imports, much of it from Asia. California’s policies did not reduce the state’s demand for refined products. They simply moved the source of those products across the Pacific – and into the path of a crisis on the other side of the world.
The step that makes raw crude oil resources usable
Modern life demands thousands of products, from medicines and fertilizers to plastics, lubricants, and transportation fuels. Most begin as crude oil, natural gas or coal, which must be refined, gasified or cracked before they can serve as feedstocks for manufacturing. Crude oil alone is a component in more than 6,000 products.
Natural resources have latent value. Processing is what makes that value usable. A nation that controls this step controls much of its economic future.
The developing world wants its own refineries
It is no surprise, then, that nations across Asia, Africa, and the Middle East want refineries of their own. Rising incomes mean rising transportation fuel demand, and the Hormuz crisis has shown every importer the cost of depending on someone else’s refinery.
Industry databases list roughly 180 new refinery projects announced or planned worldwide for this decade, about 70 of them in Africa. OPEC expects some 5.8 million barrels per day of new refining capacity by 2030, more than 90% of it in Asia-Pacific, Africa, and the Middle East.
Announced is not built
Engineers know that a project announcement is only the beginning. A refinery must pass through planning, environmental assessment, permitting, financing, front-end engineering, construction, and commissioning. Each stage is a filter.
We studied China’s coal-to-gas sector during its boom a decade ago, when dozens of synthetic natural gas projects were announced. Years later, only four were in operation.
Refining is proven technology, so attrition will be far lower. But the lesson holds: count what is being built, not what is being announced. Even so, roughly half of expected capacity growth is already operating or under construction – several million barrels per day. The demand for refined crude oil is real and growing worldwide.
Who can build refineries?
The bottleneck is not ambition. It is capability.
The core process technologies – hydrocracking, catalytic cracking, reforming – are licensed by only a handful of companies. Perhaps two or three dozen engineering, procurement, and construction (EPC) contractors worldwide can deliver a large grassroots refinery.
Heavy-wall reactors and large compressors come from a limited number of manufacturers, with long delivery times. The same contractors, compressor makers, and commissioning teams are now needed to repair war-damaged refineries in the Gulf – competing directly with new projects in the developing world.
And a refinery needs trained operators, maintenance crews, and a regulatory system capable of overseeing it safely. The refinery technical talent cannot be imported overnight.
A refinery can be closed in months. Building one takes five to seven years or more.
Who will pay?
A large refinery costs billions of dollars. Nigeria’s 650,000-barrel-per-day Dangote refinery cost roughly $20 billion.
At the very moment developing nations need this capital, multilateral lenders and many western banks have stepped back from fossil fuel projects in the name of climate policy. Chinese contractors, meanwhile, arrive with state-backed financing and a construction team in a single package.
Whatever one thinks of the “debt trap” debate, the structure is clear: those who finance and build a nation’s refineries gain lasting influence over its transportation fuel supply. Western climate finance policies have not reduced developing nations’ need for refined products. They have only changed who builds the refineries.
Pollution moves; it does not disappear
Imported fuels must meet U.S. product specifications, and ships are subject to international limits on fuel sulfur, with stricter rules near North American coasts. But the emissions and safety standards at the refinery itself are set where the refinery stands – often far looser than in California.
Closing a tightly regulated California refinery and importing from one with weaker standards, then shipping the product thousands of miles, does not clean the air. It exports the emissions and adds the voyage.
A view from Asia
For Asia, conflict in the Gulf is not a distant event. It is paid for at the pump in Tokyo, Seoul, Mumbai, and Manila, and in the price of every product that depends on refined crude oil. When the strait closes, Asian refineries run short, and the shortage travels on to the U.S.
What the world needs is not another round of escalation but the restoration of free and stable navigation. The U.S. should remember that some 95% of the world’s 8 billion people live outside its borders. It can end the policies that are forcing its own refineries to close, and help developing nations build theirs well – with technology, training, and financing.
Japan knows this work. For decades, Japanese engineering firms have built refineries, petrochemical complexes, and gas plants across the Middle East, and trained the people who run them.
Crude oil is not useless; it is unfinished. Refining completes it. The nations that understand this are building refineries. The question is whether the U.S. and other partners will help them do it – or leave the job, and the influence, to others.
(Ronald Stein and Yoshihiro Muronaka – BIG Media Ltd., 2026)