Northwest European Gasoline Margins Plunge Over $7 as Crude Oil Prices Spike

Gasoline refining margins in Northwest Europe plummeted by more than $7 on Tuesday, as a sharp increase in crude oil prices squeezed profitability for the region's refiners. According to market data, the key indicator of refinery profitability fell to $46.53 per barrel.

Margin Collapse Driven by Crude Surge

The significant one-day drop was primarily driven by a surge in the cost of crude oil, the main feedstock for refineries. The price increase was reportedly linked to disruptions in oil transportation from Saudi Arabia, which tightened the global supply outlook and pushed input costs higher for fuel producers.

When the price of crude oil rises faster than the price of refined products like gasoline, it erodes the profit margin, or "crack spread," that refiners can earn.

Market Activity

Despite the pressure on margins, trading activity in the region's physical gasoline market remained robust on Tuesday. Key transactions included:

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• Approximately 12,000 metric tons of E5 gasoline barges changed hands, with ExxonMobil and Equinor selling to Gunvor and BP.
• An additional 8,000 metric tons of E10 gasoline were traded, with TotalEnergies selling to buyers including ExxonMobil, BP, and Varo.

In a sign of a tight Mediterranean market, a bid from trading house BGN for a gasoline cargo at $1,346 per metric ton (FOB Agioi Theodoroi) did not attract any sellers, according to the report.

Broader Context

The volatility in European fuel markets comes amid broader shifts in global energy trade. With Middle Eastern exports facing disruptions, Nigeria's new Dangote refinery has reportedly emerged as a significant fuel supplier to Europe.

The facility is said to be operating at record profitability and is actively preparing for a potential public listing, highlighting how new supply routes are being established to meet European demand.