Refining margins in the U.S, northwest Europe, and Asia have surged to two-year highs due to tightening diesel and gasoline markets with no immediate relief in sight. Refinery closures, maintenance, repairs, and Ukrainian attacks on Russia’s oil product exports have all contributed to the tightening refined petroleum markets globally.

Despite forecasts of a crude glut depressing benchmark crude futures, strength in gasoline and middle distillates is making the oversupply narrative less bearish than expected. Refining margins in North America and Asia are at multi-year highs, with European margins even higher due to the upcoming EU ban on imports of products made from Russian crude oil.

Sanctions on Russian oil giants Rosneft and Lukoil are disrupting global product flows as buyers scramble to avoid secondary sanctions. Africa’s largest refinery, the Dangote plant, is facing operational setbacks, outages, and strikes. Refinery closures in the West have led to strengthening margins, allowing companies to beat earnings estimates and post solid results.

Diesel margins are at two-year highs due to maintenance, sanctions on Russia, and tightening fuel supplies. Global refinery runs have dropped, but are expected to rise to capitalize on higher margins and middle distillate demand. Refinery margins are at two-year highs in Europe, Asia, and the U.S., prompting refiners to maximize yields on middle-of-the-barrel products.

The strength in the middle distillate market is expected to incentivize refiners to focus on these products. Global refinery margins are described as “astronomical,” signaling a need for refineries to run at full capacity. Refineries worldwide are urged to maximize production to meet the high demand for refined petroleum products.

In summary, global refining margins are at multi-year highs due to tightening fuel markets, refinery closures, sanctions on Russia, and disruptions in the supply chain. Refiners are expected to focus on maximizing yields on middle distillate products to meet the high demand. The trend is expected to continue in the near term, with strong margins forecasted.

Read more at Yahoo Finance: Refining Margins Soar as Global Oil Product Markets Tighten