Diesel strength overshadows gasoline in the Atlantic Basin

Gasoline imports in Atlantic Basin well below seasonal average 

Gasoline markets remain weak despite the peak summer driving season, as high inventories, soft demand, and narrow margins weigh on the outlook. In the United States, weekly data from the Energy Information Administration (EIA) shows gasoline inventories trending above the five-year average in several regions, particularly in PADD 1 (East Coast) and PADD 3 (Gulf Coast). Even as refineries scale back gasoline output in favor of diesel and jet production, the drawdowns have not been sufficient to meaningfully tighten the market. This reflects sluggish gasoline demand despite favorable seasonal conditions.

Atlantic Basin seaborne gasoline/blending component arrivals (bd)

Key buyers in Latin America and West Africa are relying more on domestic refining, reducing import requirements. This has made it harder for Atlantic Basin refiners to clear excess supply. An exception to this is the Mexico East Coast, where gasoline imports are up in July, despite the Dos Bocas Olmeca (350kbd) refinery running at 190kbd and overall higher gasoline production in June. That being said, gasoline cracks remain subdued, averaging $12-13/bbl in Northwest Europe and the US Gulf Coast, and just $7–8/bbl in Asia for July, compared to diesel margins which have averaged over $20/bbl across regional refining hubs in July, according to data from Argus Media. This margin gap is prompting refiners to prioritize middle distillate yields over gasoline.

A confluence of weak margins, elevated gasoline inventories in PADDs 1, 3 and 5 as per the EIA, followed by tepid demand signals across major consuming regions suggests that gasoline cracks are likely to remain capped in the near term unless there is a significant and surprising rebound in consumption.

Diesel cracks outperform gasoline, driving up exports from USGC

Diesel markets remain the standout performer in refined products, with strong crack spreads and firm transatlantic flows underscoring robust demand. Vortexa data shows that US Gulf Coast (USGC) diesel exports to Northwest Europe have risen sharply in 2025, outpacing both 2023 levels and the 2016–2024 seasonal average. As of July, exports remain steady m-o-m around 190kbd—close to the top end of the historical range. This surge reflects strong European diesel demand amid limited local output, but more than anything a stronger supply side push from the USGC.

US Gulf Coast diesel/gasoil exports to Northwest Europe (bd)

For the USGC, Northwest Europe remains a natural outlet due to well-established arbitrage routes and supportive freight rates on MR tankers due to high availability on the USGC. Another flow which has seen particular strength is the USGC diesel imports into South America East Coast reaching 200kbd in July. Here, USGC refiners have managed to regain some market share from Russia in Brazil and strong demand from Argentina.

Looking ahead, elevated exports are likely to persist into Q3, particularly as European autumn refinery maintenance season approaches. Also, of note is the US Gulf Coast hurricane season which could throw another spanner in the works, tightening supply and keeping diesel cracks elevated. For traders, the transatlantic diesel arb remains one of the most profitable refined product routes, further adding strength to USGC diesel exports.