A new framework for understanding geopolitical restraint

Mutually
Assured
Refining
Capacity

The invisible economic force that keeps great-power conflicts from escalating into all-out war — not through the fear of nuclear annihilation, but through the inescapable logic of oil refinery interdependence.

825 Operating refineries globally[1]
103.8M Barrels per day capacity[2]
$10B Cost to build a single refinery[3]
5-7 yrs Construction timeline[3]
Framework comparison

Two theories of deterrence

MAD

Mutually Assured Destruction — the Cold War doctrine that nuclear arsenals prevent war through the certainty of mutual annihilation. Fear is the stabilizing force.

  • Deterrence by existential threat
  • Enforced by military capability
  • Binary: total war or total peace
  • Requires visible hostile capability
  • Based on fear of death
vs

MARC™

Mutually Assured Refining Capacity — a 21st-century deterrence framework based on economic interdependence through oil refinery supply chains. Trade is the stabilizing force.

  • Deterrence by economic harm
  • Enforced by trade dependency
  • Spectrum: war capped at skirmishes
  • Invisible — operates in the background
  • Based on fear of economic collapse
Global refinery distribution — 2024

825 refineries.
No region self-sufficient.

Asia-Pacific
320 refineries
36.5M bpd — leads world
North America
150 refineries
22M bpd — US leads at 18.4M
Europe
120 refineries
Imports 30% of diesel from Asia
Eurasia / Russia
100 refineries
6.7M bpd; 40% of EU diesel
Middle East
73 refineries
Fuels jets in 50+ countries
Latin America
46 refineries
Venezuela: 450K bpd capacity
Africa
16 refineries
Growing: 1.2M bpd new by 2030

Source: Statista / Offshore Technology, 2024[1] · Global capacity: 103.8M bpd (OPEC ASB 2025)[2]

Why refineries can't simply be replaced

The combinatorial engineering marvel

🏗️

Capital & Time

$5–10B

Per refinery. Construction takes 5–7 years minimum, extended by a 20% global shortage of skilled welders and chemical engineers.[3]

⚙️

Steel & Materials

50,000 tons

High-grade steel sourced from Japan, South Korea. Hydrocracker vessels use nickel-chromium alloys from Russia and South Africa — 12–18 month lead times.[3]

🧪

Catalysts

1,000 tons

Zeolite-based FCC catalysts sourced from Germany and China. Replaced every 2–3 years at $10–20 million per cycle. A supply chain in its own right.[3]

🔩

Spare Parts

10,000+

Per facility. European control valves, Chinese pump seals, sourced from 30+ countries. One delayed part can idle the entire refinery.[3]

⚡

Failure Points

10,000+

A single catalyst shortage or equipment failure halts operations. Downtime costs $5–10 million per day. Restart after shutdown costs $100–200 million.[3]

👷

Skilled Labor

10,000

Workers needed per build, including 2,000–3,000 specialist welders. The U.S. alone faces a deficit of 50,000 welders by 2026. This bottleneck is global.[3]

Five geopolitical conflicts — same restraining force

Wars that stayed skirmishes

01

Israel — Iran — China Triangle

China is Israel's third-largest trading partner ($15B/year, 12% of imports). China processes 17M bpd and relies on Iran for 1.5M bpd of sanction-resistant crude. Targeting Iran's 1.8M bpd refineries would stall China's Shandong hub (4.2M bpd), spike global diesel, and wound Israel's own trade. Economic suicide in all directions.[3]

Active tension
02

Saudi Arabia — Yemen — Houthi Conflict

In September 2019, Houthi drones struck Abqaiq — the world's largest oil stabilization plant — knocking out 5.7M bpd overnight, roughly 5% of global supply. Oil spiked ~15–20% in a single day.[4] Saudi Arabia, exporting 30% of refined products to Asia, had every incentive to cap escalation. Production restored within weeks. The economic logic held.

Verified event
03

Russia — Ukraine — Europe

Russia's 6.7M bpd refining capacity supplies 40% of Europe's diesel imports.[3] Ukraine has deliberately avoided targeting Russian refineries like Tuapse (240K bpd) to prevent fuel shortages from cascading into EU allies — the very countries funding Ukraine's defense. A 10–20% European diesel price hike could fracture political support.

Active conflict
04

India — Pakistan Border Tensions

India's 5M bpd refineries supply 20% of South Asia's fuel. Pakistan's 450K bpd domestic capacity can't meet its own demand. Full-scale war would cut India's regional fuel exports, triggering an estimated 25% regional price surge that would devastate both economies equally. Nuclear neighbours, held back also by fuel pipelines.[3]

Chronic tension
05

Venezuela — U.S. Dynamics

U.S. Gulf Coast refineries were specifically designed for heavy Venezuelan crude and process 500K bpd from Venezuela. Despite severe political tensions and sanctions, military confrontation never materialised. Disrupting that flow would raise U.S. diesel prices 10–15% — a domestic political cost no administration wants to own.[3]

Managed tension
Case study deep-dive — September 14, 2019

Abqaiq attack:
MARC in real time

September 14, 2019 — 04:00 AST
Drone + cruise missile strike
25 drones and missiles hit Abqaiq (world's largest oil processing plant, 7M bpd capacity) and Khurais oil field. Largest single disruption in modern oil history.[4]
September 16, 2019 — Market open
Oil price spike — largest in a decade
Brent crude surged nearly 20% intraday to $71.95/barrel. Largest single-day oil price jump in over 10 years, per Bloomberg.[5]
September 17, 2019
Saudi Aramco begins controlled response
Aramco reports 2M bpd restored within 48 hours. Drew on stored reserves, shifted to offshore crude, imported refined products domestically. No customer contract was missed.[6]
Late September 2019
Full production restored
Saudi Arabia fully restored capacity within weeks, even as physical repairs continued for months. Oil prices fell below pre-attack levels. The U.S. deployed 3,000 troops — but no military strike on Iran followed.[6]

The 2019 Abqaiq attack is the clearest real-world test of MARC™. Despite the single largest disruption to global oil supply in modern history, no major power escalated to direct military confrontation. The economic consequences were so immediate and global that de-escalation became the rational choice for every actor.

"A successful attack on Abqaiq would be akin to a massive heart attack for the oil market and global economy."

— Bob McNally, former U.S. National Security Council[6]

5.7M bpd knocked offline
5% of global supply lost
+15–20% oil price spike, day 1
3 wks to full restoration
The Abqaiq proof of concept — applied to Israel

Iran could obliterate Israel.
So why won't it?

THE CAPABILITY — WHAT IRAN COULD DO

Abqaiq proved that a swarm of relatively cheap drones and cruise missiles can knock out the world's largest oil processing plant overnight. Iran — and Hezbollah as its proxy — possesses a far larger and more sophisticated arsenal. The Lawfare Institute and Washington Institute have documented exactly what Iran's proxies could target:[7][8]

2
Oil Refineries
Bazan (Haifa) + Paz (Ashdod) — only two in the country. Israel imports 40%+ of energy as oil. Knock them out and the country loses fuel for transport, military, and generators within days.[8]
5
Coastal Desalination Plants
These 5 facilities supply up to 85% of Israel's potable water. All clustered along the Mediterranean coast. Hezbollah's precision-guided missiles have publicly targeted them by name — Nasrallah said so explicitly in 2019.[7]
2
Critical Highway Corridors
Israel's highway network has an extreme concentration of high-traffic arteries in a tiny geography. Severing Route 1 and Route 6 simultaneously — Israel's two major national corridors — paralyzes military logistics and civilian movement.
+
Ben Gurion Airport + Leviathan Gas Rig
~24M passengers/year through a single airport. Leviathan gas rig sits 10km off the northern coast. A hit there stops 40%+ of Israel's natural gas supply and risks a Mediterranean environmental catastrophe that would knock out nearby desal plants.
A senior Israeli electricity official warned in 2024: "After 72 hours without electricity, it will be impossible to live here." Electricity depends on refineries. Refineries depend on crude imports through Ashkelon port. Knock out Ashkelon + refineries + desal = civilizational standstill within a week.[9]
THE RESTRAINT — WHY IRAN WON'T DO IT

MARC™ explains the paradox. Iran's capability to devastate Israel is not in question. What holds it back is not international law, not deterrence by nuclear threat, not goodwill — it is the Strait of Hormuz, and what closing it would do to Iran itself.

THE STRAIT OF HORMUZ IN NUMBERS[10][11]
20M
bpd transits the Strait (2024)
20%
of all global petroleum consumption
90%
of Iran's oil exports go through it
83%
of all Iranian exports depend on it

Iran's bypass pipeline — the Goreh-Jask pipeline built in 2021 — has a capacity of only 300,000 bpd. Iran exports ~1.5–1.7M bpd. Iran stopped using it entirely after September 2024. There is no viable bypass. The Strait is Iran's economy.[10]

An all-out assault on Israel that triggered a U.S./Western military response would not just close the Strait — it would invite strikes on Kharg Island, Iran's primary oil export terminal handling 90% of its oil. Iran would go from sanctioned-but-exporting to economically dead.

"Closing the strait would severely hurt Iran itself. Iran still has multiple options — closing the strait is far from its best option."
— Niu Xinchun, China Institutes of Contemporary International Relations, 2025[12]
Deutsche Bank (2025): worst-case Hormuz closure scenario sends oil above $120/barrel. China, Iran's largest customer, loses 13.4% of its seaborne oil imports overnight.[13]

War looks simple until you trace what it does to the oil and gas supply chains that keep civilization running.

A senior Iraqi militia commander put it plainly in 2024: "If the energy war begins, the world will lose 12 million barrels of oil per day. Either everyone will enjoy the blessings of energy, or everyone will be deprived."[14] That is MARC™ spoken aloud by its own potential enforcers — a tacit acknowledgement that the destruction of energy infrastructure is a mutually self-defeating act. Iran has the capability. It has the proxies. What it lacks is the freedom to use them without triggering its own economic annihilation through the Strait it cannot afford to close.

$120+ Estimated oil price, Hormuz closure (Deutsche Bank)
27% Of global seaborne oil trade — Hormuz, 2024
0 Times Iran has closed the Strait — despite threatening it repeatedly
Why strategic reserves won't save you

The SPR illusion
& the zombie movie myth

❌ The Myth

Strategic reserves make us self-sufficient

  • The U.S. SPR holds ~400M barrels of crude oil (as of 2025, following drawdowns)[15]
  • Zombie films show gasoline lasting decades in storage
  • "We have enough reserves to outlast any conflict"
  • Crude oil = usable fuel in a crisis
  • SPRs can replace refinery networks
✓ The Reality

Refineries are the irreplaceable constraint

  • SPRs store crude — useless without functioning refineries to process it[3]
  • Gasoline loses ~20% octane within 6–12 months through oxidation[3]
  • Diesel and jet fuel last 1–2 years maximum, even with stabilizers[3]
  • U.S. max SPR drawdown: 3.5M bpd — a 10% refinery disruption exhausts it in ~5 months[15]
  • Restarting an idled refinery: 3–6 months + $100–200M. Supply chains need 1–2 years to rebuild[3]

The bottom line: Fuel pumps at gas stations require 1–2 MW of electricity to operate. That electricity comes from grids that rely on refined fuel. Without refineries, the entire modern energy chain collapses within weeks — reserves or not.

Looking ahead — 2025 to 2030

MARC™ gets stronger

Capacity at Risk

By 2030, significant refining capacity faces closure risk in Europe and North America. The IEA projects global capacity grows only 3.3M bpd through 2030 — far below historical trends — as EV growth erodes demand and aging plants shut down.[16]

EuropeHigh exposure
North AmericaMedium exposure
Asia-PacificLow exposure — expanding

New Capacity Online

Between 2025–2030, approximately 5.8M bpd of new refining capacity will come online globally. Asia-Pacific accounts for 3.2M bpd of this. Africa adds 1.2M bpd. The Middle East adds 1M bpd. New entrants in Nigeria, India, and the Gulf create new nodes of dependency — and new MARC™ relationships.[17]

US Vulnerability Growing

U.S. refineries average 40+ years old. Hurricane risk, tariffs, and EV adoption could reduce capacity by ~2M bpd by 2030. A Gulf Coast outage — like the disruption to Saudi Ras Tanura (435K bpd) — could spike U.S. jet fuel by 15–20%. Aging infrastructure amplifies MARC™ constraints.[3]

OPEC Sees Tightening

OPEC's World Oil Outlook projects an increasing deficit between required and potential refining capacity — rising from 0.5M bpd in 2027 to 1.6M bpd by 2030. Tighter global refining markets mean single-facility disruptions carry even greater geopolitical weight, strengthening MARC™'s restraining effect.[17]

The new geopolitical equilibrium
Refineries are the world's great vulnerability — and its greatest constraint on war.

MARC™ doesn't prevent conflict. It caps it. Nations can skirmish — they can sanction, drone, and sabre-rattle — but full-scale war against an economically intertwined refinery network is self-defeating for everyone at the table. This is the hidden architecture of modern peace.

825 Choke points
30+ Countries per supply chain
0 Nations self-sufficient
Based on Kumar Thangudu's MARC™ framework[3] · Research: EIA · IEA · OPEC ASB 2025 · Baker Institute · Statista · Lawfare · Washington Institute · Compiled 2025 · ↓ View all references
Strait of Hormuz: 90% of Iran's oil exports — Iran has never closed it Hezbollah has publicly targeted Israel's 2 refineries + 5 desal plants by name Hormuz closure worst-case: oil above $120/barrel — Deutsche Bank 2025 Global refinery capacity: 103.8M bpd US SPR max drawdown: 3.5M bpd 2019 Abqaiq strike knocked out 5.7M bpd — oil spiked +20% in one day China processes 17M bpd — relies on Iran for 1.5M bpd Europe imports 30% of diesel from Asia Israel: 72 hrs without power = "impossible to live here" — Israeli grid official, 2024 Refinery restart cost: $100–200M + 3–6 months Gasoline shelf life: 6–12 months — zombie movies are wrong Russia supplies 40% of EU diesel imports Iran bypass pipeline capacity: 300K bpd — vs 1.5M bpd of exports through Hormuz New refinery build: $5–10B · 5–7 years · 10,000 workers Strait of Hormuz: 90% of Iran's oil exports — Iran has never closed it Hezbollah has publicly targeted Israel's 2 refineries + 5 desal plants by name Hormuz closure worst-case: oil above $120/barrel — Deutsche Bank 2025 Global refinery capacity: 103.8M bpd US SPR max drawdown: 3.5M bpd 2019 Abqaiq strike knocked out 5.7M bpd — oil spiked +20% in one day China processes 17M bpd — relies on Iran for 1.5M bpd Europe imports 30% of diesel from Asia Israel: 72 hrs without power = "impossible to live here" — Israeli grid official, 2024 Refinery restart cost: $100–200M + 3–6 months Gasoline shelf life: 6–12 months — zombie movies are wrong Russia supplies 40% of EU diesel imports Iran bypass pipeline capacity: 300K bpd — vs 1.5M bpd of exports through Hormuz New refinery build: $5–10B · 5–7 years · 10,000 workers

References

[1]
Number of operational and planned crude oil refineries worldwide, 2023–2024 Offshore Technology / Statista, July 2024 — statista.com
[2]
OPEC Annual Statistical Bulletin 2025 — World refining capacity expanded to 103.80 mb/d in 2024 OPEC, 2025 — opec.org
[3]
Mutually Assured Refining Capacity (MARC™) — original framework and data Kumar Thangudu, May 2025 — kumarletter.com
[4]
Abqaiq–Khurais attack — Wikipedia, full event record including 5.7M bpd outage and attack details Wikipedia, continuously updated — wikipedia.org
[5]
Saudi Arabia crude oil production outage affects global crude oil and gasoline prices U.S. Energy Information Administration (EIA), September 2019 — eia.gov
[6]
The US Response to Attacks on Persian Gulf Oil Infrastructure and Strategic Implications for Petro-States Baker Institute, Rice University, October 2019 — bakerinstitute.org
[7]
Hezbollah's Precision Threat to Israel — documented target list including desal plants, refineries, Nasrallah's 2019 statement Lawfare Institute, October 2023 — lawfaremedia.org
[8]
Why Israel Should Focus on Iranian Military and Security Targets, Not Oil Infrastructure Washington Institute for Near East Policy — washingtoninstitute.org
[9]
As war with Hezbollah looms, concerns over vulnerability of power grid — "After 72 hours without electricity, it will be impossible to live here" Times of Israel, June 2024 — timesofisrael.com
[10]
Amid regional conflict, the Strait of Hormuz remains critical oil chokepoint — 20M bpd, Iran bypass pipeline data U.S. Energy Information Administration (EIA), 2024/2025 — eia.gov
[11]
Strait of Hormuz — Iran and Oil: 90% of Iran's oil exports, 83% of all Iranian exports Strauss Center for International Security and Law, UT Austin — strausscenter.org
[12]
Does Iran have options beyond blocking the Strait of Hormuz? — Niu Xinchun quote on Iran's self-deterrence Global Times, June 2025 — globaltimes.cn
[13]
Strait of Hormuz alternate routes, oil prices — Deutsche Bank $120/barrel worst-case scenario; China's 13.4% seaborne oil from Iran Fortune / IER, June 2025 — fortune.com · instituteforenergyresearch.org
[14]
Iran and Israel Evaluate Escalatory Options — Iraqi militia Kata'ib Hezbollah "energy war" warning; Iran proxy threat matrix The Soufan Center, October 2024 — thesoufancenter.org
[15]
U.S. Refinery Capacity Report — SPR capacity, max drawdown rate of 3.5M bpd U.S. Energy Information Administration (EIA) — eia.gov/petroleum/refinerycapacity
[16]
Oil 2024 Executive Summary — global refining capacity forecast to rise only 3.3 mb/d through 2030 International Energy Agency (IEA), 2024 — iea.org
[17]
OPEC World Oil Outlook — 5.8M bpd new capacity 2025–2030; 1.6M bpd deficit by 2030 OPEC Digital Publications — publications.opec.org
[+]
Outlook on Global Refining to 2028 — 2.6–4.9M bpd of new capacity 2024–2028 U.S. Energy Information Administration (EIA), August 2024 — eia.gov (PDF)
[+]
Persian Gulf Oil Exports and the Strait of Hormuz — 20M bpd, 27% of global seaborne trade Institute for Energy Research (IER), June 2025 — instituteforenergyresearch.org
[+]
Iran Conflict and the Strait of Hormuz: Oil and Gas Market Impacts Congressional Research Service (CRS), Congress.gov — congress.gov
[+]
How a Conflict in Iran Could Affect Oil Markets in the Gulf Arab States Columbia University / CGEP, February 2026 — energypolicy.columbia.edu
[+]
The Israeli Water Policy and Its Challenges During Times of Emergency — desalination supplies 85% of potable water MDPI Water, October 2024 — mdpi.com
[+]
Can Israel's Energy Infrastructure Survive a Missile Strike? The Media Line, August 2024 — themedialine.org