Refined Fuels Outpace Crude Oil in Market Turmoil
Oil prices have dipped to a two-month low due to decreasing tensions between the US and Iran, but the refined product market remains tight.
The global supply of petroleum products is tighter than crude oil supply, resulting in record-high refining margins.
Despite the slump in crude prices, gasoline and diesel refining margins jumped to new highs this month after the re-escalation (currently on hold) in the Middle East and Russia's ban on diesel exports.
The price spread between fuel and crude oil has surged, indicating that global fuel markets remain very tight despite millions of barrels of crude exiting the Strait of Hormuz between June and July.
In Europe, diesel refining margins reached a record high of over $60 per barrel after Russia's ban on diesel exports, while gasoline traded at a four-year high premium to crude of $41 per barrel.