Hormuz Disruption Lingers as U.S. Refining Margins Surge to Nearly Four-Year Highs
Alina Collins
Even as Strait of Hormuz shipping gradually resumes, US crack spreads have surged to their highest since June 2022, signaling that the global refining bottleneck is far from resolved and limiting room for fuel prices to fall.
How high are crack spreads right now?
The gasoline crack spread — the price of one barrel of gasoline minus one barrel of crude — sits above $53 per barrel, near its highest since June 2022.
The 3-2-1 crack spread (profit from refining three barrels of crude into two of gasoline and one of diesel) remains elevated, running at more than double pre-Iran-war levels.
This means → refiners are earning far more per barrel processed than before the war — not a modest rebound, but a structural jump in margins.
Crude is falling — why are refining margins still so high?
These record margins have arrived while crude prices are declining and US refineries are running at full capacity — conditions that would normally compress profits.
In plain terms = cheaper oil plus maximum output should squeeze margins. The fact that margins keep climbing tells us the bottleneck is not "is there enough crude?" but "can the world refine enough of it?"
Wells Fargo analyst Sam Margolin notes that refining was already tight before the war, so staying tight afterward is logical. He adds that refining margins typically lag crude-price moves, on the way up and down alike.
Where exactly are diesel and gasoline tight?
Diesel: global supply was already short before Ukrainian strikes on Russian refineries knocked out additional capacity.
Gasoline: Rapidan Energy cites resilient US domestic demand, high export volumes, the industry's tilt toward diesel and jet-fuel production squeezing gasoline output, and unusually low early-summer inventories — four factors stacking up to support prices.
Unplanned outages at East Coast refineries have added further pressure. This means → even when refiners want to produce more, surprise shutdowns are cutting actual supply.
Trump is pressuring retailers to cut prices — will it work?
Trump has publicly urged retailers to target gasoline at roughly $2.50 per gallon. The national average currently sits above $3.80, a gap of more than $1.30.
High margins will keep refiners running flat out, but analysts say a further decline in gasoline prices still depends on easing global supply constraints.
Put simply = the president can jawbone gas-station owners, but he cannot speed up Hormuz shipping recovery or Russian refinery repairs. Until the supply-chain bottleneck loosens, prices have limited room to fall.
Content is for reference only, not financial advice.