The European gasoline-naphtha spread fell to its lowest since 24 March 2025 at the close on 10 March, as naphtha values appear to be strengthening in relation to gasoline prices as a result of the US-Iran war even though availability for the light-ends products is not expected to tighten in Europe.
Eurobob non-oxy gasoline closed at a $65/t premium to NWE cif naphtha cargoes on Tuesday, 10 March, marking its narrowest in almost a year, and down from from $102.75/t on 27 February before the US-Iran war broke out. The spread began to shrink when markets opened after the US and Israel carried out strikes on Iran on 28 February, decreasing to $72/t on 2 March.
Naphtha prices have received support from firm gasoline blending activity since February, with the gasoline-naphtha spread gaining almost 60pc over the course of the month, but it narrowed in response to the conflict in the Middle East, as naphtha prices rose by $158.25/t to $745.50/t since the start of the war.
Gasoline blending activity remains firm ahead of the upcoming switch to summer-specification materials for gasoline in April, in line with seasonal expectations. And participants have also noted interest to store gasoline from the start of the year, in order to profit from the contango structure of the market.
The increase in naphtha prices comes even though supplies of the fuel have not yet showed clear signs of tightening and as petrochemical demand in Europe remains slow. Many steam crackers in Northwest Europe are running at minimum rates currently or moving into planned maintenance, putting a cap on consumption of the fuel for now. European refineries are also entering spring maintenance season, trimming local naphtha output, but this is not enough to offset the lack of demand from soft cracker economics. Naphtha cracks were back near $11/bl to North Sea Dated on 10 March — close to their weakest since mid-2025.
A wider gasoline-naphtha spread is typically indicative of the feasibility of processing naphtha into high-octane components for the gasoline pool. The widening spread in February supported demand and prices for high-octane blending components, with reformate and ethanol appearing to be of particular interest to participants.
The US-Iran conflict also pushed up prompt European gasoline values even though the region does not rely on the Mideast Gulf for the product, but not as much as it did for naphtha. Outright gasoline values rose to $810.50/t on 10 March, from $690/t on 27 February. Unusually for this season, the contango of the March/April gasoline oxy swap in Europe has narrowed significantly since the start of the war.
The prompt March oxy contract has gained ground as markets price in potential global supply constraints if the conflict continues for a longer period of time. The March contract traded at a $11/t discount to April on 10 March. This compares with a $30/t discount typically in March compared with April in previous years. March typically trades at a discount to April because the summer-specification gasoline used from April is more expensive. Refiners will likely continue to blend and store gasoline in order to prepare for increased demand during the summer months.
