Northwest European Gasoline Margins Jump to $35.50 on Supply Fears

Northwest European gasoline refining margins surged on Monday, climbing by nearly $3.50 to over $35 per barrel amid a confluence of supply disruptions and rising crude oil prices.

Margin Surge and Trading Activity

The profit margin for refining gasoline in the region, a key indicator for the industry, reached $35.52 per barrel, according to market data. The increase was accompanied by an active trading session in the physical barge market.

Activity reported on Monday included:

• Approximately 8,000 metric tons of E5 gasoline barges changing hands, with Equinor and Exxon Mobil selling to BP and TotalEnergies.
• An additional 16,000 metric tons of E10 gasoline barges traded, with sellers including Exxon Mobil, Gunvor, and Shell, and buyers including Varo and TotalEnergies.

Supply Concerns and Geopolitical Tensions

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The sharp rise in margins coincided with a 3% increase in global oil prices, which were buoyed by several factors pointing to tighter supply. Geopolitical risk escalated after Iran reportedly stated that the U.S. must lift sanctions before the critical Strait of Hormuz is reopened.

Adding to supply constraints, Saudi Aramco has delayed the restart of its 400,000-barrel-per-day Jazan refinery to August 30, following two attacks since late July, according to industry monitor IIR. Separately, Ukraine’s military reported an overnight strike on the Taneko oil refinery in Russia's Tatarstan region, allegedly causing a fire.

Market Implications

The widening crack spread, or refining margin, reflects strong demand for finished gasoline products relative to the cost of crude oil feedstock. This signals a highly profitable environment for European refiners.

For the broader market, the combination of physical refinery outages and heightened geopolitical risk suggests the potential for continued price volatility. These supply-side pressures could maintain upward momentum on wholesale gasoline prices, which can eventually impact costs for distributors and consumers.