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U.S. refiners are seeing some of their strongest profit margins in years as global fuel markets remain tight despite the recovery of energy shipments through the Strait of Hormuz, Bloomberg reports.
Gasoline and diesel crack spreads remain well above pre-conflict levels, indicating that refining capacity and fuel supplies have not fully recovered from recent disruptions. Although crude oil prices have fallen and U.S. refineries are operating at near-maximum utilization, refining margins remain elevated because demand for refined products continues to outpace available supply.
The strength in refining economics reflects persistent supply chain constraints, including limited global refining capacity, tight diesel inventories and reduced Russian fuel production following attacks on refineries.
Gasoline prices have also remained elevated due to resilient U.S. demand, strong export activity, relatively low seasonal inventories and unplanned refinery outages, particularly on the East Coast. In addition, refiners have increasingly prioritized producing diesel and jet fuel over gasoline, further tightening gasoline supplies.
While renewable fuel compliance costs reduce reported profitability to some extent, underlying refining margins remain exceptionally strong. High margins are expected to encourage refiners to continue operating at elevated utilization rates, but sustained relief in fuel prices will likely require broader improvements in global refining capacity and supply chain conditions.
Until these constraints ease, gasoline and diesel prices are expected to remain supported even as crude oil prices stay relatively subdued.
