Global prices for refined products like gasoline and diesel have remained elevated this year for a number of reasons, most notably the prolonged disruption to normal vessel traffic through the Strait of Hormuz and the war-related damage to refineries across the Persian Gulf. But while the U.S.-Iran war may have attracted much of the spotlight, the state of Russia’s refining sector may be at least as much of a contributing factor. In today’s RBN blog, we look at why the deteriorating conditions in Russia may be the biggest disruptor to refined product prices globally, how trade flows for gasoline and diesel have rapidly shifted in recent months, and what a post-Ukraine-war recovery in Russian refining capacity might look like.
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As we noted recently in For the Love of Money, the run-up in refined product prices has been sustained this summer even though crude oil prices have retreated from their 2026 highs set just a few months ago, resulting in skyrocketing crack spreads — see Figure 1 below. (We’ll discuss the 3-2-1 crack spread and other important refining metrics during our upcoming School of Energy: Fundamentals, set for September 9-10 in Houston.) While several factors contribute to the differential trends between crude and product prices, the overwhelming reason is that global supply and demand are much tighter in product markets than crude markets. A major contributor to that tightness has been Russia’s ongoing war with Ukraine, which has led to sanctions, loss of Western technology and a “talent bleed” that imply the potential for a long-term deterioration of Russian refining capacity, even after hostilities cease.
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About the song
“Rock Bottom” was written by Phil Mogg and Michael Schenker and appears as the fifth song on side one of UFO’s third studio album, Phenomenon. Many would argue that the definitive version of the song is the 11-minute version that appears as the second song on side three of UFO’s live album, Strangers in the Night. The song talks about the woes of despair, mortality and grief, but is really known as a showcase for the guitar prowess of Michael Schenker’s solos. It is a signature song of 1970s guitar-driven hard rock. On a side note: one must wonder if it was the inspiration for Spinal Tap’s infamous song, "Big Bottom," now residing in the “where are they now?” files. You be the judge! Personnel on the record were: Phil Mogg (vocals), Michael Schenker (guitar), Pete Way (bass) and Andy Parker (drums).
Phenomenon was recorded in 1973-74 at Morgan Studios in London and produced by Leo Lyons. Released in May 1974, it went to #202 on the Billboard Bubbling Under the Top Albums chart. Two singles were released from the LP. The live album, Strangers in the Night, fared better, going to #42 on the Billboard 200 Albums chart when it was released in January 1979.
UFO was an English hard rock band formed in London in 1968 by vocalist Phil Mogg, guitarist Mick Bolton, bassist Pete Way and drummer Andy Parker. They released their debut album, UFO 1, in 1970. Twenty-five members passed through the band from its formation until its final breakup in April 2024. They released 22 studio albums, 17 live albums, 16 compilation albums, an EP and 12 singles. Over a career spanning five decades, they sold over 20 million records worldwide. Phil Mogg was the only original member of the band for its duration.
"About the Song" -- written by Mickey McMahan , RBN Director of Musicology
