Refinery Outages Pushing Up Gas Prices More Than Cost of Crude Oil, Fed Says

Global oil refining disruptions are causing fuel prices to increase more than crude oil costs alone would indicate, according to a Dallas Federal Reserve report. These disruptions, including refinery damage, shipping constraints, and export restrictions, have reduced global refining capacity by up to 10 percent. The report notes that the gap between crude oil prices and wholesale fuel prices, known as crack spreads, has widened significantly, surpassing levels seen after the 2022 invasion of Ukraine.

• Global oil refining disruptions are increasing fuel prices beyond what higher crude costs suggest.
• Refinery damage, shipping constraints, and export restrictions have idled up to 10% of global refining capacity.
• Crack spreads (the difference between crude and wholesale fuel prices) have widened significantly, exceeding levels post-2022 Ukraine invasion.
• Fuel price pressure may continue even after normal shipping through the Strait of Hormuz resumes.