Renewed conflict in the Middle East dominated the week ended July 17, 2026, sending crude prices sharply higher as Gulf Coast crack spreads soared to record levels (yellow oval in graph below). The benchmark 3-2-1 crack spread skyrocketed above $62/bbl after reaching a record high earlier in the week, driven primarily by exceptionally strong middle distillate margins. Diesel cracks surged to all-time highs while gasoline cracks soared to their strongest level in four years, highlighting robust product demand despite the sharp increase in crude prices. Rather than eroding refining economics, higher crude prices were more than offset by stronger product values, allowing refiners to preserve historically attractive margins.
As discussed in this week's Tradeview Report, record refining margins were driven by exceptional strength in both gasoline and diesel markets. Because our benchmark 3-2-1 crack spread is weighted two-thirds gasoline and one-third diesel, gasoline cracks climbed to $51.19/bbl, their highest level since June 2022, while diesel cracks reached a record $83.88/bbl, lifting the composite margin to an all-time high of $65.38/bbl on July 16.
Although these margins point to exceptionally strong refinery profitability, they should be viewed alongside the cost of Renewable Identification Numbers (RINs), which have also risen sharply as Renewable Volume Obligations (RVOs) reached record levels, increasing refiners' compliance costs. Even so, the strength in product values has more than offset both higher crude prices and elevated RIN expenses, leaving refinery economics near historic highs. While the 3-2-1 crack spread eased modestly into the weekend, it remained at historically elevated levels, underscoring continued tightness in refined product markets and providing strong support for refinery runs and prompt crude demand.
