Oil Refining Margins Drive Up European Fuel Prices, ECB Blog Finds
Rising Refining Margins and Their Impact on Euro Zone Fuel Prices
FRANKFURT, July 31 (Reuters) - A rise in refining margins to near record levels contributed to the increase in euro zone fuel prices in recent months and a further margin increase is still likely in August before a retreat, a European Central Bank blog post said on Friday.
Inflation Trends and Oil Price Pressures
Euro zone inflation rose to 2.9% in July from levels around 2% before the U.S. and Israeli war in Iran, and persistently high oil prices of close to $90 a barrel suggest that price pressures could broaden, forcing the ECB to raise interest rates.
Refining Margins: Diesel and Petrol
Diesel Margins
Apart from the outright rise in oil prices, refining margins have risen.
For diesel, refining margins were €0.10 per litre of the retail prices across the euro area before the Iran war and that rose to €0.35 in the first three weeks of July.
Petrol Margins
For petrol, the increase was from €0.04 of the retail price in February to €0.23 in July, the blog said.
Future Outlook for Refining Margins
Expected Margin Peaks and Decline
"Looking ahead, based on refined diesel futures on 20 July, the contribution from margins is expected to peak in August before declining to €0.16 by the end of 2027, close to levels observed at the end of February 2026," the blog post, which is not necessarily the ECB's view, said.
Factors Behind Widening Refining Margins
Disruptions and Supply Tightening
Refining margins widened as disruptions to refining operations and fuel exports in the Middle East, along with reduced Russian refinery throughput, tightened global fuel supplies.
Russian Export Ban and Global Impact
Russia this week extended its ban on the export of diesel and gasoline until January 31, deepening a global supply crunch and sending prices soaring, even in countries that no longer buy fuel from Moscow.
Reporting and Editing
(Reporting by Balazs Koranyi; editing by Barbara Lewis)
