European Gasoline Refining Margins Fall as Crude Oil Surges Above $100

Northwest European gasoline refining margins fell significantly on Wednesday, squeezed by a surge in crude oil prices that topped the $100 per barrel threshold for the first time since late July. The key profitability indicator for refiners dropped by approximately $13 to settle at $39 per barrel, according to market data.

Market Drivers

The primary driver for the margin compression was the rising cost of crude oil, a refiner's main input. Oil prices climbed following reports of increased military conflict between U.S. and Iranian forces, stoking market fears of potential supply disruptions from the critical Middle East region.

This geopolitical risk premium adds to inflationary pressures, raising concerns about higher energy costs for both consumers and industrial users. The development highlights how sensitive refiner profitability is to sharp movements in the underlying commodity markets.

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Trading Activity and Demand Outlook

Despite the pressure on margins, trading activity in the European gasoline barge market remained steady. Approximately 8,000 metric tons of E5 gasoline were traded, with BP selling to Gunvor and Varo. An additional 3,000 metric tons of E10 barges changed hands in a deal where Totsa sold to Varo.

Looking at the broader demand picture, a forecast from Sinopec’s research arm projects a notable slowdown in China. The report suggests China's oil demand could decline for a third consecutive year in 2026, potentially falling by 600,000 barrels per day, or 8.9%. This longer-term demand trend in a key global market provides a potential counterweight to the current supply-side concerns.