Crack spread

Also known as: Crack

A crack spread is the difference in price between a refined product (or group of products) and crude oil.

It is used as a rough indicator of market conditions, roughly approximating the margin from processing light sweet crude through a cracking configuration refinery.

Typically, a crack is defined in terms of one specific product versus one specific crude. For example, the diesel crack on Brent. In this case, it is meant to indicate how much the price of the individual product is contributing to refining profitability.

Some more complicated cracks are used to provide a somewhat more accurate indicator of overall refining margin:

  • 3-2-1 crack - Defined as (2 x gasoline price + 1 x diesel price) - (3 x crude price)
  • 6-3-2-1 crack - Defined as (3 x gasoline price + 2 x diesel price + 1 x fuel oil price) - (6 x crude price)

The Refinery Reference Desk includes content derived from our industry experts as well as from public data sources such as company websites. Nothing herein is intended to serve as investment advice. This material is based on information that we believe to be reliable and adequately comprehensive, but we do not represent that such information is in all respects accurate or complete. McKinsey Energy Insights does not accept any liability for any losses resulting from use of the content.



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