Gas and diesel prices likely to stay elevated as oil refining margins hit a record high The refining market is facing unprecedented pressure as margins for critical products like gasoline, diesel, and jet fuel reach record levels, despite recent fluctuations in crude oil prices. While geopolitical tensions between the U.S. and Iran have briefly pushed crude oil prices higher, the underlying issue lies in the tightening supply of refined products. Analysts warn that the "crack spreads"—the price difference between crude oil and its refined counterparts—have surged to historic highs, keeping costs elevated for consumers. The most closely watched metric, the "3-2-1 crack," measures the theoretical profit from converting three barrels of crude oil into two barrels of gasoline and one barrel of distillate fuel. This spread recently surpassed $60, marking an all-time high. Jordan Rizzuto, chief investment officer at GammaRoad Capital Partners, explained that the market’s pricing has outpaced the physical reality of supply constraints. "The underlying physical reality is still much tighter," he said, highlighting the imbalance between demand and available refining capacity. Seasonal demand for gasoline has intensified as the U.S. summer vacation season peaks, coinciding with the ongoing geopolitical tensions. During the Iran war, governments and companies rapidly depleted jet fuel and gasoline reserves, leaving refineries struggling to secure crude oil for restocking. This created a bottleneck in supply, driving prices higher. Meanwhile, global refinery outages have further exacerbated the situation. At least nine major oil refineries in the Gulf region—spanning Bahrain, Kuwait, and Saudi Arabia—were damaged and shut down during the conflict.#us #iran #gammaroad_capital_partners #jordan_rizzuto #valero_energy
