European diesel refining margins slumped more than 7% on Monday as the premium of low-sulphur gasoil futures to Brent crude contracted sharply.
The gasoil-to-Brent spread narrowed by $5.52 to $70.79 per barrel by 1612 GMT, according to market data. The decline followed a period of elevated refining margins amid tight supply conditions.
BP sold an ultra-low sulphur diesel cargo for delivery to Gdynia, Poland, during the afternoon trading window, while the Mediterranean window saw no transactions despite active bidding. TotalEnergies was the sole offer provider in the region.
The pressure on diesel margins coincided with the shutdown of Russia’s Perm oil refinery, one of the country’s seven largest processing plants by volume. The facility halted operations after a Ukrainian drone strike on August 21 ignited a fire and damaged key technological units, according to two industry sources cited on Monday.
European diesel and gasoil imports are projected to average 724,000 barrels per day in August, up from 466,000 bpd in July, data from Kpler showed. The increase reflects a surge in shipments from the United States, which accounted for more than half of total imports at 446,000 bpd.
The combination of reduced refining margins, refinery disruptions, and rising imports underscores shifting supply dynamics in Europe’s diesel market.
