Summary: European diesel margins hit fresh records on Tuesday as persistent supply disruptions from the Middle East and Russia narrowed available product. Low-sulphur gasoil futures traded at large premiums to Brent crude, and U.S. refining profitability measures also reached unprecedented levels as global markets absorbed tighter flows during a peak agricultural consumption period.
European low-sulphur gasoil futures were trading at a premium of $76.08 per barrel to Brent crude futures at 1627 GMT on Tuesday, up $2.69 from the previous close. Earlier in the session the margin touched $76.42 per barrel, establishing a new record level for the market.
The margin widening reflects continued disruptions to exports from the Middle East and ongoing constraints on Russian refinery operations, which together have tightened supply availability for diesel and related middle distillate products.
China's customs data released Tuesday showed refined oil product exports fell 12.9% year-on-year in July but rose 6.7% compared with June. The data indicate that easing of export restrictions has allowed Chinese refiners to dispatch more fuel overseas in recent weeks.
Specifically, Chinese diesel shipments climbed 88% month-on-month to 810,000 metric tons in July, bringing volumes back in line with levels seen in July of the prior year. That July diesel export total was approximately 50% above the monthly average recorded during the previous year.
Across the Atlantic, the U.S. diesel crack spread - a commonly used gauge of refining profitability - reached a record $102.20 per barrel on Monday. Market participants have pointed to global supply interruptions tied to conflicts in Iran and Ukraine as coinciding with heightened seasonal demand associated with agricultural activity.
The combination of constrained exports, refinery operational limits and seasonal consumption has produced pronounced pressure on middle distillates. The market response has been reflected in record-setting margins and crack spreads as refiners and traders reprice available stocks and flows.
Contextual note: The reported figures above reflect market prices, customs data and observed crack spreads for the dates and periods noted. The article presents the available data without extending beyond the information provided.