Diesel refining margins are trading near sixty dollars a barrel, roughly double the typical level of about thirty dollars. Gasoline crack spreads sit close to fifty dollars a barrel, also far above historical norms. Crude oil prices have fallen back into the sixties as flows through the Strait of Hormuz begin to normalize, yet refined product markets have not moved the same way. That gap between softening crude prices and elevated refining margins points to a separate disruption working through diesel supply.
Alex Hodes is Director of Energy Market Strategy at StoneX, where he tracks refinery run rates, crack spread dynamics and global product flows across crude oil and refined products. His coverage of refining margins and regional export patterns runs directly through diesel dynamics.
Key Themes from the Discussion
Diesel crack spreads trade near $60 per barrel, about double the typical $30 level.
Russian refinery attacks cut into diesel exports more than any other single factor.
China plans to raise refined product exports starting in July and August.
Russian Refineries Trigger a Diesel Supply Squeeze
"We have seen refined products be a little bit more resilient than crude oil", Hodes notes. Russian refineries have faced repeated attacks, and that damage has cut into diesel exports more than any other factor in the market right now. Crude oil, in contrast, has benefited from the rebound in flows out of the Strait of Hormuz, since most of that barrel surge has been crude rather than refined product. The result is a divided market, with crude pressure easing while diesel stays constrained by a distinct supply shock. In Hodes' view, the two disruptions are running on largely separate tracks.
Diesel Cracks Climb Toward Record Territory
Refining margins across both major fuels have pushed to unusual levels. Gasoline crack spreads are trading around $50 per barrel, while diesel margins sit near $60, and "these prices typically are around closer to $30 per barrel", Hodes explains. Middle East refinery outages have added to the pressure, taking capacity offline at a moment when Asian buyers, particularly in China, have been holding more refined fuel at home rather than exporting it. That combination has left margins "exponentially elevated", in Hodes' words. Diesel remains the more exposed of the two products given its direct link to the Russian refinery outages.
China Moves to Cap the Margin Rally
China has announced plans to increase refined product exports in July and August after months of keeping more fuel at home. That shift could remove one of the key supports behind the recent surge in refining margins. Hodes expects crude oil prices to keep climbing from current levels even as refined product margins level off or give back some recent gains. "I anticipate we're closer to a top and bottom there and we could see some retracement in refining margins", he adds.
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--- Expert: Alex Hodes, StoneX Director of Energy Market Strategy
Energy
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