Refinery attacks drive global fuel prices higher
JAKARTA – A wave of attacks on oil refineries in the Middle East and Russia has driven global refining margins to record highs, keeping prices for diesel, petrol and jet fuel elevated even as crude oil prices have retreated from their peak.
Disruptions to refining capacity have tightened global fuel supplies.
The supply squeeze has pushed up energy product prices, threatening to raise operating costs for businesses while eroding household purchasing power through higher transport and logistics costs.
According to Reuters, LSEG data showed that the premium of European low-sulphur gasoil futures over crude oil reached USD 74.66 a barrel on Thursday (31/7), an all-time high that reflects the substantial profits refiners are earning from processing crude into diesel.
"The market is signalling that refining capacity has become an issue that is just as important, if not more so, than crude oil scarcity," said Jeffrey Baird, founder of Merritt Point Partners.
Pressure on fuel supplies intensified after Saudi Arabia's Jizan refinery, which has a processing capacity of 400,000 barrels a day, suspended operations on 27 July following an attack by Yemen's Houthi movement.
According to Kpler data, the refinery exported more than 200,000 barrels of fuel a day over the past three months, with diesel and gasoil accounting for most of its output.
In Kuwait, part of the 615,000-barrel-a-day Al-Zour refinery was also forced to shut down because of a power outage. Meanwhile, Ukrainian drone attacks have continued to disrupt Russia's refining capacity, prompting Moscow to extend restrictions on petrol and diesel exports.
Lukoil's refinery in Perm, which has a capacity of around 260,000 barrels a day, became the latest facility to shut one of its crude distillation units after being hit by a drone attack on Thursday.
The surge in refining margins has not been limited to diesel. The premium of the Eurobob petrol benchmark over Brent crude reached USD 42.21 a barrel, approaching the four-year high of USD 44.94 a barrel recorded in mid-July.
Jet fuel refining margins in Europe also remained above USD 80 a barrel at the end of July. Although lower than the record of almost USD 109 a barrel reached in March, the level remains well above the period before 2026, when jet fuel margins had never exceeded USD 80 a barrel.
A similar trend has emerged in the United States. Petrol refining margins briefly reached USD 60 a barrel in mid-July, while diesel margins hit a record USD 93.44 a barrel amid strong domestic demand and robust fuel exports.
Valero Energy, the second-largest refining company in the United States, said the refining industry had entered a new phase characterised by structurally higher profit margins. (DH/ZH)
