Karachi: Pakistan's Gross Refining Margins (GRMs) for September 2026 averaged $18.3 per barrel, a notable decline from the $30.1 per barrel recorded in August, according to JS Global. This marks a significant decrease in refining margins, falling below $20 per barrel after two consecutive months of higher margins. However, the figure reflects a year-over-year improvement from $6.2 per barrel in September 2025, driven by stronger petroleum product prices amid the ongoing US-Iran conflict.

According to JS Global, this year-on-year rise in GRMs is primarily attributed to the elevated prices of petroleum products. However, on a sequential basis, the margins were adversely affected by a faster increase in crude prices compared to product prices, alongside a cap on high-speed diesel cracks set at $41.89 per barrel effective August 20, 2026. The GRMs are calculated before accounting for duty differentials and inventory movements and incorporate product supplier premiums and freight charges beyond the crack spread.

The analysis utilizes Dubai crude, which averaged $114 per barrel in September 2026 compared to $70 per barrel in the same period last year. Spot premiums reportedly increased to $35-40 per barrel during September 2026, though the impact is anticipated to be reflected in the subsequent months of October and November as cargoes booked in September are typically received later. A crude premium of $4 per barrel was assumed for September 2026.

Furthermore, the calculation of the fuel oil spread incorporated both local and international prices, with the weightage assigned to local prices aligning with domestic sales over total upliftment. The quarterly calculated industry GRMs for the first quarter of the fiscal year 2027 stood at $27.6 per barrel, reflecting the evolving dynamics of the global crude market and its implications for Pakistan's refining sector.