Phillips 66 estimated nearly $1 billion in losses from its short position in oil and other related commodity derivative contracts in the first quarter as the war in Iran sent crude and fuel prices skyrocketing.

The refiner projects impacts of $900 million on its standard net-short position on crude, refined oil products, natural gas liquids and renewables feedstocks-related derivative contracts, according to a regulatory filing Monday.

While the company sees a hit from its short positions on contracts that track commodity prices, the losses from those financial hedges could be offset by the rising value of the physical crude oil and fuels that the firm has on-hand after prices surged.

The war in Iran has choked off traffic in the Strait of Hormuz, a critical waterway through which roughly a quarter of the world’s seaborne oil travels. U.S. crude oil has surged by nearly 68% since the conflict began, while diesel futures have climbed 62%.

The refiner also saw around $3 billion in expenses for collateral on its derivative positions, due to the run-up in commodity prices. It has since drawn a new $2.25 billion 364-day term loan and upsized another securitization facility from $1.25 billion to $1.75 billion.

A spokesperson for Phillips 66 did not immediately respond to a request for comment.

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