Refiners reported sharply higher diesel and jet fuel margins in Q1'26 following the start of the U.S.-Israeli attacks on Iran, which led to the closure of the Strait of Hormuz. Much of the profit boost is expected to occur later in the year. Diesel cracks strengthened as barrels moving out of the Middle East were choked, and low inventories also contributed to the upside. The ultra-low sulfur diesel futures crack spread, a measure of a refinery's profit margin, jumped 105% to a record high of $86.25 per barrel on March 20. Jet fuel margins have also rallied since the conflict, particularly for coastal refiners and export-oriented refiners. Despite the near-term impact, Phillips 66 is expectedly to report a loss of $0.27 per share, up from a loss in the previous year.