Northwest European gasoline margins have surged to a four-year high, according to industry data published on Wednesday, as a combination of peak summer driving demand and supply constraints pushes refining profitability sharply higher. The crack spread — the difference between the price of crude oil and the wholesale price of gasoline — has widened significantly in recent weeks, reflecting tighter market conditions across the region.
Refining margins have been buoyed by a series of unplanned outages at several major European refineries, which have reduced output just as the summer holiday season drives up consumption. At the same time, lower-than-expected gasoline shipments from Asia, where refinery runs have been curtailed by maintenance and economic slowdown, have limited the usual flow of imports into Europe. Analysts at S&P Global Commodity Insights noted that the combination of these factors has created a supply deficit that has propelled margins to levels not seen since mid-2022.
For UK motorists, the wholesale price rally is likely to translate into sustained or higher costs at the pump. While retail petrol prices have not yet fully reflected the margin surge, fuel retailers typically pass on higher wholesale costs within a few weeks. The AA warned that drivers should brace for further increases, particularly if the current tightness persists through August. Brent crude oil, the international benchmark, traded around $82 per barrel on Wednesday, adding to the upward pressure on refined products.
The rally in gasoline margins has provided a boost to the earnings outlook for UK-listed refining and integrated oil companies. Shares in BP and Shell have edged higher this week, with analysts at RBC Capital Markets highlighting that higher downstream margins could partially offset weaker upstream profits from lower crude prices compared to last year. However, the broader FTSE 100 was flat on Wednesday, with gains in energy stocks offset by declines in utilities and consumer staples.
Market participants are now watching for signs of whether the margin spike will prove temporary or extend into the autumn. The seasonal peak in demand typically fades after August, but if refinery outages continue and Asian exports remain subdued, the current tightness could persist. “The market is finely balanced,” said a trader at a London-based commodity brokerage. “Any further disruption could keep margins elevated for longer than usual.”