Diesel crack spread hits record $98 after Houthi refinery strike

A Houthi drone strike on Saudi Aramco's Jazan refinery sent the diesel crack spread above $98 a barrel on Thursday, setting a record high and underscoring how geopolitical disruptions continue to ripple through global fuel markets even as crude oil prices remain well below their recent peaks.

Record Refining Margins

The diesel crack spread — a measure of the profit margin from refining crude oil into diesel — breached the $98 mark after reports emerged that Yemen's Iran-aligned Houthi rebels had struck the Jazan facility in southwestern Saudi Arabia, according to Walter Bloomberg, a widely followed markets account. The refinery can process roughly 400,000 barrels of crude per day and had already been halted following a previous attack, with a restart expected later in August.bloomingbit+1

Saudi Arabia's Energy Ministry confirmed a fire broke out at the facility but said it was extinguished with no casualties reported. The ministry did not disclose the cause of the blaze. The Houthis claimed responsibility for the drone strike, which came just days after the kingdom signed a defense pact with Turkey.npr+2

Broader Market Reaction

Crude oil prices initially fell more than 3% on Thursday before paring losses to less than 1% as traders weighed the attack against broader supply dynamics. Brent crude rose in the session's aftermath, reflecting renewed supply anxiety in a market already strained by months of conflict.

The attack is the latest in a string of Houthi strikes on Saudi energy infrastructure since the U.S.-Israeli war with Iran escalated earlier this year. Reuters reported on August 12 that Saudi Red Sea oil exports were increasingly "going dark," with tankers switching off tracking signals to avoid attacks. Aramco's CEO warned in early August that the conflict had cost the global market more than 2.6 billion barrels of oil since February.reuters+1

Crack Spreads in Uncharted Territory

Refining margins have been climbing steeply for months. Bloomberg reported in mid-July that the 3-2-1 crack spread had already reached $70 a barrel, then a record. By late July, the spread had exceeded $64 per barrel on certain measures, and Axios noted that the divergence between crude and refined product prices was historically unusual. Thursday's move above $98 represents a further escalation driven by fears that attacks on refining capacity could tighten diesel supplies at a time when global inventories are already running low.cruxinvestor+2