Refiners are providing a fresh source of drama for oil markets

season has officially begun. Despite rising inflation and the lingering threat of the pandemic, motorists hit the highways with gusto over the recent Memorial Day long weekend. Some 40m Americans travelled by road, an increase of 8.3% on the same weekend a year earlier. That wanderlust came even as prices at the pump were about 50% above last year’s levels, driven by an intense squeeze on global refining.In normal times, the refining business is a low-margin, low-drama adjunct to the geopolitically charged upstream business of oil production and the politically charged downstream business of retail sales. Refiners typically make profit margins of $5-10 a barrel and often go through painful spells of unprofitability. This time, however, refining is playing a starring role—the machinations of the oil-producing countries, war in Ukraine and sanctions on Russian oil exports notwithstanding. Margins for many refiners have rocketed, and bottlenecks in the sector are propelling global petrol prices upwards.