Gas and diesel prices likely to stay elevated as oil refining margins hit a record high
Global oil refining margins hit a record high, with the 3-2-1 crack spread exceeding $60, as strong seasonal demand and refinery outages tighten supply. Key disruptions include nine Gulf refineries damaged in the US-Iran conflict, 18 in Russia due to the Ukraine war, and incidents like the Valero Port Arthur explosion in Texas. Russia’s suspension of diesel exports, critical to 10% of global supply, further drove prices upward.
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Gulf refineries’ outages—while damaging—are secondary to Russia’s diesel embargo risk: 10% of global supply and no immediate Gulf substitutes at scale. The $60 crack spread reflects structural tightness, but if Russia caves in negotiations or diverts exports via India/China, margins could correct faster than seasonal demand peaks signal.
The latest refining margins spike is real, but extrapolating it as a pure supply shock overlooks India’s own refiners running at 102 % utilisation—Port Arthur outage alone means ₹3,000 crore/week extra cost at MRPL Mangalore.