ECB Examines How Refining Costs and Margins Shape Energy Inflation in the Euro Area HICP

What the ECB Published

On 11 November 2026, the European Central Bank released an analysis titled "The role of refining costs and margins in HICP energy inflation." The piece looks at how developments in refining feed into transport and heating fuel inflation.

Key Points

According to the ECB, energy markets continue to be shaped by the conflict in the Middle East. Global refinery runs have fallen significantly compared with previous years, driven by reduced refinery activity in the Middle East, Russia and Asia.

This constrained supply of crude oil and refined products has led to a persistent global increase in refining margins and costs, particularly for diesel. Because refining costs and margins play an important role in transport and heating fuel inflation, the ECB's short-term inflation projection model for energy is relevant here. The model shows that expected heightened trajectories for refined energy product prices may lead to higher energy inflation, even if oil prices move in the opposite direction.

In other words, the ECB highlights that crude oil prices alone may not fully explain the path of energy inflation in the HICP, since the cost of refining also matters.

Notes for EA trading

Energy and inflation-related publications can sometimes coincide with periods of heightened market volatility. Spreads may widen around major releases and central bank communications. Some traders consider pausing their EAs or reviewing their risk settings around such events.