▲ A gas station in the United States
Global refining margins across the United States, Europe, the Middle East, and Russia are soaring toward all-time highs as conflicts in the Strait of Hormuz intensify, according to reports from Reuters and other foreign media on July 20 (local time).
Matthew Sigel, head of digital assets research at asset manager VanEck, stated that the 3-2-1 crack spread—a key indicator of U.S. refinery profitability—rose to approximately 70 dollars per barrel on July 20, surpassing levels seen during the 2022 energy crisis.
This means that for every three barrels of crude oil refined into two barrels of gasoline and one barrel of diesel, a gross profit of 210 dollars is generated.
U.S. refiners, which have been the primary beneficiaries of surging overseas demand since the start of the Middle East conflict, have seen their margins widen as the price of refined fuel has risen faster than that of crude oil, which is currently around 80 dollars per barrel.
The permanent closure of 1.2 million to 1.3 million barrels per day of refining capacity in the U.S. since 2019 is also cited as a structural factor that has reduced the capacity to absorb supply disruptions.
The impact is also being reflected in consumer prices.
According to the American Automobile Association (AAA), the average price of gasoline in the U.S. has jumped to 4.00 dollars per gallon, while diesel has risen to 5.11 dollars.
U.S. refining stocks have also maintained their strength, with Marathon Petroleum rising 24 percent, Phillips 66 up 23 percent, and Valero up 20 percent in July.
The situation in Europe is similar.
European diesel margins have hit an all-time high of approximately 65 dollars per barrel, and northwest European refining margins have climbed to around 30 dollars per barrel, setting a seasonal record.
This is because the supply chain itself is being shaken.
Since the outbreak of the Middle East war in February, the blockade of the Strait of Hormuz has left major refining facilities in Saudi Arabia, Bahrain, Kuwait, and the United Arab Emirates (UAE) in a state of partial or full suspension.
Russia has restricted diesel exports after its refining facilities were hit by successive drone attacks from Ukraine, and Asian refiners have also reduced operations due to constraints on crude oil supply.
The International Energy Agency (IEA) reported that global production of refined petroleum products in the second quarter decreased by approximately 5 million barrels per day compared to the previous year.
Although pressure eased slightly when the Strait of Hormuz was temporarily reopened following a ceasefire between the U.S. and Iran on June 17, data from energy analytics firm Kpler shows that oil product exports from the region for the month of June remained at approximately 1 million barrels per day, just one-quarter of pre-war levels.
However, with the recent reignition of tensions between the U.S. and Iran, passage through the strait is blocked once again.
(Photo: AP, Yonhap News)
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