The Oil Gusher: European refining margins hitting turbulence

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The Oil Gusher: European refining margins hitting turbulence

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The Oil Gusher

European refining margins hitting

turbulence

Industry Overview

Key takeaways 29 May 2026

Equity• Three months in, the Strait remains closed, but crude as well as product prices are far

Pan-Euro

off their April peaks Oils

• We believe inventory releases and demand destruction are doing most of the work to

bring global energy flows into balance Christopher Kuplent >> Research Analyst

MLI (UK)• We reiterate our view not to chase momentum and instead seek underpriced quality in +44 20 7995 8222

top Big Oil pick TTE christopher.kuplent@bofa.com

Matthew Smith >>

Research Analyst

MLI (UK)Open Sesame? Strait of Hormuz remains shut +44 20 7996 7109

The closure of the Strait of Hormuz as critical chokepoint for ~20% of global oil and matt.smith1@bofa.com

LNG flows has now lasted for three months – taking stock: Spot Brent oil +30% (albeit Cian Evans-Cowie >>

20% off its peak), Europe’s spot TTF gas up ~44% (>25% off its peak). But European ResearchMLI (UK) Analyst

refining margins have retreated furthest (~60% off their April peak – although still up +44 20 7995 0940

cian.evans-cowie@bofa.com

~80% from their levels ex ante). As we get closer to depleting inventories, we believe

demand destruction remains the main variable bringing global energy flows back into

balance – with our focus this week on jet fuel as the most exposed (and price-sensitive) Jargon buster:

market.

Product demand (destruction) ticker bbl: barrel

Although most demand data is available with a time lag (i.e. latest stats still only show Crack: refined product margin

April), Asia has already shown evidence demand destruction with Chinese jet fuel

consumption down 1% y/y in April (compared to +8% y/y in March).