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European Energy Markets
27JUL

Brent ends worst quarter since 2020

2 min read
09:24UTC

Brent closed the second quarter down about 30%, its worst quarter since 2020, settling near $72-73 as Doha diplomacy and Iranian flows weighed on the benchmark.

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Key takeaway

Cheaper crude widens European refining margins, but stranded capacity and sanctions law cap how much Europe can capture.

Brent closed the second quarter down about 30%, its steepest quarterly fall since the second quarter of 2020, after a roughly 20% drop in June alone 1. The benchmark fell 2.93% to $72.46 on 26 June as the Doha US-Iran talks resumed and settled near $72-73 into the close 2, extending a descent that had reached a three-month low days earlier as Iranian flows under General License X weighed on the benchmark .

Crude input cost fell faster than physical product prices through June, so European refiners gain from the move rather than lose. With Amsterdam-Rotterdam-Antwerp (ARA) gasoil stocks already at a 2.5-year low , the ICE Gasoil crack, the refining margin between European distillate and crude, stays supported near recent levels around $54/bbl, and the dynamic favours further widening.

European refiners cannot touch the discounted GL X barrels under EU Regulation 833/2014, and BP Rotterdam's second crude unit is still dark, capping how much of the wider crack Europe can actually capture. The margin gift accrues to whoever can run barrels: integrated majors with spare conversion capacity, not the plants with units down for outage.

Deep Analysis

In plain English

Brent crude is the global oil price benchmark, used to price roughly two-thirds of internationally traded oil. A quarterly fall of 30% is extreme: oil markets rarely move that much in three months. The drop was driven mainly by OFAC's GL X authorising Asian buyers to purchase Iranian crude, flooding global markets with additional supply, and by US-Iran diplomacy in Doha reducing the war-risk premium that had been built into the price. European refiners are unusual beneficiaries: the ICE Gasoil crack is the difference between the price a refinery charges for diesel-type fuel (gasoil) and the price it pays for crude oil. When crude falls faster than product prices, that spread widens, improving refinery profits. ARA refers to the Amsterdam-Rotterdam-Antwerp hub, Europe's main oil storage and trading centre. ARA gasoil stocks at a 2.5-year low mean there is unusually little diesel in European storage, supporting gasoil prices even as crude falls. The catch: BP Rotterdam's second large crude unit has been offline since May, limiting how much crude European refineries can actually process to capture this improved margin.

Deep Analysis
Root Causes

OFAC's GL X (issued 22 June) routes Iranian crude to Asian buyers through 21 August, expanding global seaborne crude supply and depressing Brent. Regulation 833 bars European refiners from lifting a single barrel of that Iranian crude.

European refiners therefore sit in an asymmetric position: Brent-linked crude from non-sanctioned suppliers falls in price because of Iranian supply they cannot access, while gasoil product prices remain supported by ARA stock tightness driven by the BP Rotterdam second-unit outage (offline since May) and prior Hormuz-related supply chain disruption.

BP Rotterdam's remaining dark unit caps European crude-processing capacity, preventing refiners from fully expanding throughput to capture the widened crack spread even when the input-cost advantage is at its largest.

What could happen next?
  • Opportunity

    European refiners with available crude throughput capture improved input margins as the ICE Gasoil crack holds near $54/bbl against Brent near $72-73, a spread structurally supported by ARA gasoil stocks at a 2.5-year low.

    Immediate · Assessed
  • Risk

    If OPEC+ announces additional production in early July or GL X flows accelerate, Brent could overshoot lower before the ICE Gasoil crack narrows, trapping European refiners with commitments made at wider-spread assumptions.

    Short term · Reported
  • Consequence

    BP Rotterdam's second unit dark since May means European refinery sector cannot fully monetise the widened crack; the throughput ceiling limits the macro support that higher refinery margins would otherwise provide to European product balances.

    Short term · Assessed
  • Meaning

    Brent's worst quarterly fall since Q2 2020, driven by an Iranian supply waiver rather than demand destruction, confirms that the GL X mechanism can move the global benchmark by amounts comparable to a major demand shock.

    Medium term · Assessed
Sources:CNBC·Forbes Advisor·Forbes Advisor
Mentions:Brent Crude →ICE Gasoil →General License X →Rotterdam →ARA →Iran →Doha →EU Regulation 833/2014 →Wood Mackenzie →OPEC →Saudi Arabia →Amsterdam →Antwerp →OFAC →Brent-WTI →BP →
First Reported In

Update #12 · ISAB Priolo dodges the cliff

CNBC· 30 Jun 2026
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Causes and effects
Caused by
GL X prices relief Europe cannot buy
GL X Iranian crude flows to Asian buyers drove Brent to a three-month low and were the primary structural driver of the 30% Q2 decline.
Occurred 22 Jun 2026
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Brent hit a three-month low at $79
The Q2 close near $72-73 is an extension of the three-month low Brent reached on Iran diplomacy, carrying the quarterly decline to its worst since Q2 2020.
Occurred 17 Jun 2026
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This Event
Brent ends worst quarter since 2020
A 30% quarterly slide in crude lifts European refining margins rather than crushing them, because sanctions law keeps the cheap barrels out of European hands.
Led to
Brent grinds to $70 into OPEC+ weekend
Extends the roughly 30% quarterly decline that closed Q2 on 30 June.
Occurred 2 Jul 2026
Read story →
Different Perspectives
Slovakia
Slovakia
Slovakia says it dropped its hold-out on the 21st sanctions package only after Ursula von der Leyen personally signed written gas-price and supply guarantees. The Council of the European Union's own 17,238-character release on the package names neither Slovakia nor any guarantee, leaving Bratislava's account unconfirmed by the institutional record.
EU regulator on capacity mechanisms
EU regulator on capacity mechanisms
Brussels is watching Germany's StromVKG first 4.5 GW capacity auction move toward its 8 September bid deadline without a resolved state-aid clearance for the 9 GW 2026 programme's gas-plant subsidies. A negative spark spread this deep on cheap gas strengthens the case for subsidised dispatchable capacity, the same case still awaiting a state-aid ruling.
French power exporters
French power exporters
French day-ahead cleared EUR 41.13/MWh on Sunday 26 July, EUR 43.09 below Germany, on wind more than doubling and a demand trough, not on any nuclear recovery. The desk expects the discount to hold only as long as French wind and weekend demand repeat, not as a durable nuclear-cost advantage.
European gas storage operator
European gas storage operator
A storage operator stopped bidding for prompt TTF cargoes on 21 July, reading the strike-halt unwind as the start of a fuel-side correction rather than a floor. It expects the gap between prompt and forward gas to keep narrowing as the war premium continues leaving the curve.
German gas-fired power fleet
German gas-fired power fleet
German gas-fired plants cut output from 4.37 GW to 2.85 GW between 24 and 27 July, even as TTF fell 8 per cent, because below roughly minus EUR 40/MWh the fuel price stopped deciding dispatch. The fleet expects no relief until wind eases or StromVKG's first 4.5 GW auction adds capacity.
French industrial power consumers
French industrial power consumers
France's day-ahead discount to Germany has nearly closed as TTF and EUA rise together on both sides of the border, eroding the arbitrage French industry relied on through the summer. A standing negative spark removes the German demand buffer that kept that spread wide.