Energy market developments continue to be shaped by the conflict in the Middle East. Global refinery runs have fallen significantly compared to previous years, driven by reduced refinery activity in the Middle East, Russia and Asia. The constrained supply of crude oil and refined products has led to a persistent global increase in refining margins and costs, particularly for diesel. In view of the important role of refining costs and margins in transport and heating fuel inflation, the ECB’s short-term inflation projection model for energy shows that expected heightened trajectories for…