European Diesel Crack

The European Diesel Crack, the margin refiners earn turning crude into diesel, hit a record $60.17 a barrel on 8 July, after holding near $46 a barrel through June on OPIS and EIA data, roughly double the seasonal norm . The record followed Russia's ban on all diesel exports through 31 July, announced by Deputy Prime Minister Alexander Novak after Ukrainian strikes drove Russian refinery runs to multi-year lows ; the ban widened an earlier restriction that had applied to producers only, and came on top of a 39% fall in Russian seaborne diesel exports already recorded in June.

The crack is the spread between European gasoil futures, tracked by the ICE Gasoil benchmark, and crude oil. It has stayed bid through a run of physical tightness: ARA gasoil stocks fell to a 2.5-year low of 13.56mb in mid-June , and ARA jet fuel hit a six-year low the same week even as gasoline stocks rebuilt .

EU Regulation 833/2014 bars European refiners from buying Russian or Iranian diesel, so the European pool cannot draw on the cheapest nearby barrels however loose the global balance runs. That exclusion, not the physical rebuild elsewhere, is what has kept the crack from repricing lower through 2026. It also explains why the July record is a supply story rather than a repeat of the Hormuz risk premium the wires blamed it on: Regulation 833/2014 already barred Russian diesel from the European pool, so the ban removes no barrel Europe was buying. What it tightens is the marginal replacement barrel the pool must source instead, and that tightening, on top of already-thin ARA stocks, is what pushed the margin to a record rather than a modest premium.