LONDON, June 16 (Reuters) - Europe is shipping less gasoline to the U.S. during peak summer driving season, as demand has been rising on the continent where supply has been cut by refinery closures and other disruptions from the Iran war, according to data, traders and analysts.
European gasoline imports to the U.S. have traditionally helped balance the market in the world's largest consumer of the fuel. Analysts said the U.S.-Iran deal to end the war, announced on Sunday, will not immediately change a tight gasoline supply-demand balance.
Shipments of gasoline and blending components from Europe averaged 1.63 million barrels per day last month, down from 1.9 million bpd last year, according to data from Kpler. That is the lowest for any May since 2020.
Europe's second-quarter gasoline exports to the U.S. are set to average 252,000 bpd, their lowest for that time of year since 2020, around 88% of which is heading to ports on the East Coast.
"European gasoline exports should remain lower than previous years with refinery closures lowering production and growing European demand keeping the region tighter," said Rachel Lauffer, analyst at Energy Aspects. The firm expects gasoline demand in Europe's largest economies to rise by 120,000 bpd to 2.46 million bpd in June.
A drop in these flows adds to signs of a tightening global gasoline market. U.S. inventories are at their lowest for the time of year since 2014 and forecasters see an unusually large summer deficit in overall gasoline supplies and refineries shifting towards making middle distillates including jet fuel, to avert shortages caused by the Iran war.
Crude prices fell to a three-month low after Sunday's deal between the U.S. and Iran. U.S. average retail gasoline prices dipped below $4 a gallon on Sunday for the first time since mid-April.
Still, it will take months for oil supply to normalise even in the event of a comprehensive deal, analysts say, meaning the physical market for gasoline and other fuels could stay tight through the coming summer months.
"Even if the politics goes perfectly, we are months away from normal supply-demand and now-oversold prices will eventually reflect that," said Sparta Commodities analyst Neil Crosby.
SUPPLY CURBED AS REFINERS REACT TO IRAN WAR
The Iran war has disrupted fuel production at Middle East refineries, many of which are major producers of middle distillates.
Supply of gasoline components from the Middle East has dropped at the same time as refiners are changing their yields to maximise diesel and jet fuel in the face of shortages. All this is creating a ripple effect in the gasoline market, said Janiv Shah of Rystad Energy.
Refinery yields refer to a plant's production of specific fuels, which the plants can vary according to available profit margins. U.S. refiners cannot produce much extra fuel since they are running close to maximum operating rates.
"The market is not structurally short, but the balance looks increasingly vulnerable heading into peak summer demand," Rystad's Shah said, adding that football's World Cup could boost U.S. demand this summer, when gasoline supplies are expected to tighten even more than usual.
The global gasoline market will show a supply-demand deficit of 1 million bpd for May and 1.13 million bpd for June, according to Energy Aspects, larger than those months' five-year average deficit of 489,000 bpd and 352,000 bpd.
U.S. INVENTORIES DRAWN DOWN
The increased refinery production toward distillate fuels is among the factors that have driven sharp drops in U.S. gasoline stocks, according to Goldman Sachs.
U.S. gasoline inventories stood at 215 million barrels as of June 5, their lowest for a June since 2014.
The impact of higher oil prices on Americans' summer travel appears relatively limited so far, according to Bank of America's 2026 travel survey of 2,004 respondents, in which 30% said they were not changing travel plans and 40% said they were planning a trip for the World Cup.
"Keeping gasoline prices palatable to U.S. motorists this summer remains a top priority for the U.S. administration," said Ines Goncalves, analyst at Kpler.
Reporting by Robert Harvey and Ahmad Ghaddar in London, editing by Alex Lawler and David Gregorio
