European Gasoline Margins Tumble as Crude Oil Surges Past $100

European gasoline refining margins plunged on Wednesday, squeezed by surging crude oil prices that topped $100 per barrel for the first time in over a month amid escalating geopolitical tensions in the Middle East.

Crude Rally Squeezes Refining Profits

Refining margins in Northwest Europe fell by approximately $13 to settle at $39 per barrel, according to market data reported by Investing.com. The sharp decline in profitability for refiners came as benchmark crude prices rose above the key psychological level, driven by fears of supply disruptions amid rising military conflict between the U.S. and Iran. The surge in energy costs is amplifying inflationary pressures for consumers and businesses.

Despite the pressure on margins, the physical gasoline market saw a high volume of activity. Trading on Wednesday reportedly included:

• Approximately 8,000 metric tons of E5 gasoline barges, with BP selling to Gunvor and Varo.
• An additional 3,000 metric tons of E10 gasoline barges sold by Totsa to Varo.
• Within the Platts price assessment window, ExxonMobil sold a barge of E5 gasoline to Shell.

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China Demand Forecast Adds Bearish Note

Counterbalancing the supply-side concerns, a new forecast points to weakening demand from a key global consumer. A research institute under China's Sinopec predicts the country's oil demand will fall by 600,000 barrels per day (an 8.9% decline) in 2026 compared to the previous year, as reported by Investing.com.

If realized, this would mark the third consecutive annual drop in Chinese oil demand. The forecast also anticipates that China's refining capacity could shrink by up to 5.5% by 2030 from 2026 levels, with gasoline and diesel consumption expected to lead the decline.