Refiners Stick to Maintenance Despite Crack Surge

Why It Matters

The decision highlights how contractual and operational constraints can outweigh short‑term profit opportunities, influencing European fuel supply stability and refining margins amid geopolitical shocks.

Key Takeaways

• Jet crack spreads hit $109.19 per barrel record.
• Diesel cracks reach $63.92 per barrel, 40‑month high.
• Refineries keep scheduled turnarounds despite lucrative margins.
• Fixed contracts make maintenance schedule changes costly.
• Middle‑distillate supply risk persists amid Hormuz disruption.

Pulse Analysis

The recent escalation between the United States and Iran has choked the Strait of Hormuz, a critical artery for Middle‑East crude and refined product shipments. The resulting supply squeeze pushed European jet fuel crack spreads to a record $109.19 per barrel and diesel cracks to $63.92 per barrel, levels not seen in 40 months. Such spikes typically incentivise refiners to accelerate runs or defer maintenance, but the broader market context—tight feedstock availability and heightened price volatility—adds complexity to any operational shift.

European refiners, however, are largely adhering to pre‑planned spring turnarounds. A significant portion of turnaround services have already been prepaid, and contracts often lock in engineering firms at premium rates with fixed schedules. Altering these agreements would trigger cancellation fees, require rapid regulatory re‑inspections, and demand agile staffing—capabilities many plants lack. The sector’s experience during the Russia‑Ukraine war, when some operators cut maintenance to capture higher margins, contrasts sharply with today’s environment, where the cost‑benefit calculus now favours honoring existing commitments.

The persistence of maintenance schedules amid soaring margins signals a cautious outlook for European fuel markets. Should the Hormuz disruption extend, the region could face tighter jet fuel and diesel supplies, pressuring airlines and logistics firms with higher costs. Conversely, a swift de‑escalation would likely normalize crack spreads, allowing refiners to resume standard throughput without sacrificing planned turnarounds. Stakeholders must monitor geopolitical developments closely, as they will dictate whether the current equilibrium—high margins but unchanged maintenance—remains viable or forces a strategic reassessment.