The global refining market is showing an unusual divergence: crude oil prices have retreated from earlier highs, but margins for producing diesel, gasoline and jet fuel remain close to record levels.
On July 30, the premium of European low-sulfur gasoil over crude oil—the market’s benchmark diesel crack spread—rose to USD 74.66 per barrel, the highest level on record. European gasoline margins remained close to a four-year high, while jet fuel cracks stayed above USD 80 per barrel on July 29.
A crack spread is not the retail price of the finished fuel. It represents the difference between the value of a refined product and the approximate cost of the crude oil required to produce it. The indicator is widely used as a proxy for the gross processing margin available to refiners.
Normally, lower crude prices would place downward pressure on fuel prices. The current market, however, is increasingly concerned not about the availability of crude oil but about the amount of refining capacity still able to operate normally.
A series of attacks, power disruptions and plant shutdowns across the Middle East and Russia has removed significant volumes of finished fuel from the global market.
Saudi Arabia shut its 400,000-barrel-per-day Jazan refinery after the facility was attacked. The refinery had exported more than 200,000 barrels per day of fuel during the previous three months, with diesel and gasoil representing a substantial share of its shipments.
Parts of Kuwait’s 615,000-barrel-per-day Al-Zour refinery were also shut following a power failure. Al-Zour is a major producer of low-sulfur fuel and middle distillates, meaning the disruption reduced the supply available to both European and Asian buyers.
At the same time, continuing Ukrainian drone attacks on Russian refining infrastructure prompted Moscow to impose restrictions on gasoline and diesel exports. Russia is a major supplier of diesel to international markets, and reduced Russian availability has increased Europe’s dependence on cargoes from the Middle East, India and the United States.
This combination has driven diesel crack spreads sharply higher. Buyers are paying larger premiums for limited volumes of middle distillates, while refiners that remain operational can capture margins far above normal levels.
Gasoline has followed the same direction. The European benchmark Eurobob gasoline premium to Brent crude stood at approximately USD 42.21 per barrel on July 29, close to the four-year high of USD 44.94 reached on July 17.
Jet fuel conditions are even tighter. European jet fuel margins remained above USD 80 per barrel. Although below the record of nearly USD 109 reached in March, the crack spread had never exceeded USD 80 before 2026.
U.S. refiners are also benefiting from the global shortage. The U.S. gasoline crack spread reached approximately USD 60 per barrel in mid-July, while the diesel spread climbed to a record USD 93.44 per barrel. Strong exports and firm domestic demand have supported exceptionally high processing returns.
High margins are encouraging refiners elsewhere to redirect more cargoes toward deficit markets. India’s Reliance Industries significantly increased diesel exports to Europe and Brazil in July. Shipments from its Jamnagar refining complex to Europe were estimated at approximately 4 million–5 million barrels, returning to levels last seen before the latest escalation in Middle Eastern supply disruptions.
Additional imports, however, may not be sufficient to quickly restore the European balance. Regional diesel inventories have fallen to their lowest level since 2014, while Asian buyers are competing for many of the same cargoes. Europe must offer higher prices to attract barrels that could otherwise move to Asia or Latin America.
Freight, insurance and route risks are also increasing. Security concerns in the Middle East and around Red Sea shipping corridors have forced some vessels to take longer routes, increasing delivery times and transportation expenses. The availability of exportable fuel therefore does not guarantee that cargoes will reach the most affected markets quickly.
Record refining margins may also influence chemical feedstock supply. Refiners have a strong incentive to maximize production of high-margin diesel and jet fuel, potentially altering the output of naphtha, LPG and aromatic feedstocks. This could create additional cost and supply pressure for European chemical producers that depend on refinery-linked raw materials.
Diesel is widely consumed in transport, agriculture, mining and industrial activity. Sustained record crack spreads could therefore transmit higher costs through freight, machinery use and the broader manufacturing economy.
The market’s central message is clear: the immediate global constraint may no longer be crude oil in the ground, but the effective refining capacity required to convert crude into usable diesel, gasoline and jet fuel.
Margins could retreat if Middle Eastern and Russian refineries resume operations over the coming weeks. Until then, low European inventories, Russian export restrictions and continued refinery disruptions are likely to keep global fuel prices strongly supported.
