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Diesel Strength Keeps Mogas Spreads Near Record Summer Lows, Kpler Says

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Mogas-ultra-low sulfur diesel spreads are heading for their weakest summer on record as diesel continues to outperform gasoline, Kpler said in a Monday note.

Kpler expects mogas-ultra-low sulfur diesel spreads to remain negative this summer after brief recovery attempts in May and July faded alongside renewed Middle East tensions.

Spreads ended July deeply negative across all major trading regions. In contrast, spreads exceeded $200 per ton during the summer of 2022, but have stayed below $50/ton throughout this season, Kpler said.

Gasoline has benefited from tight inventories, resilient demand and lower yields. Even so, strong middle distillate markets have continued to overshadow gasoline during the peak driving season, according to Kpler.

Kpler expects diesel to remain the stronger road fuel as geopolitical risks and seasonal supply changes intensify through September, keeping pressure on mogas-diesel spreads.

Middle East shipping routes expose diesel to greater disruption than gasoline. About 996,000 barrels per day of diesel exports moved through the Bab el-Mandeb and Strait of Hormuz in 2025, compared with 378,000 b/d for gasoline.

Those routes account for about 14.3% of global diesel trade versus about 7.9% for gasoline, while gasoline exports remain more concentrated within the Middle East and east of the Suez Canal, Kpler said.

Global gasoline supply is expected to expand by about 550,000 b/d between August and September as the driving season ends.

Over the same period, global diesel balances are projected to tighten by nearly 700,000 b/d, Kpler said.

Low PADD 1 diesel inventories are expected to intensify competition for US cargoes ahead of the harvest and winter heating seasons, limiting exports into the Atlantic Basin.

Russia's diesel export ban through the end of August will add further pressure, while Indian cargoes are expected to flow mainly to Africa and Latin America, Kpler added.

In Asia, geopolitics and China's export policy remain the key drivers. Although supplies are adequate, Middle East tensions continue to pose feedstock procurement risks, Kpler said.

Lower crude availability could reduce refinery runs and reverse the recovery in product exports. A smaller August loading program from China would add further upside pressure, according to Kpler.

Despite a constructive outlook for gasoline in August, diesel is expected to remain the stronger market, according to Kpler.

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