Definition
Gross Refining Margin (GRM)
The gross refining margin is the difference between the value of refined products a refinery produces and the cost of the crude oil it processes, per barrel.
GRM measures how profitably a refiner turns crude into petrol, diesel and other products. The Singapore GRM is the regional benchmark Indian refiners like Reliance and the public-sector marketers track.
A high GRM, often driven by tight fuel supply or strong demand, boosts refiner earnings and their share prices, while weak GRMs squeeze margins. It is the refining industry's version of a crack spread and a key swing factor for oil-marketing companies' profits.
Related terms
- Crude Oil FuturesCrude oil futures are contracts to buy or sell oil at a set price for future delivery, with MCX crude tracking the global WTI benchmark in rupee terms.
- Brent vs WTIBrent and WTI are the two main global crude oil benchmarks: Brent from the North Sea prices most international oil, while WTI from the US is lighter and a key American reference.
- Crack SpreadThe crack spread is the price difference between crude oil and the refined products (petrol, diesel) made from it, a key measure of refinery profitability.
- OPECOPEC is the Organization of the Petroleum Exporting Countries, a cartel of major oil producers that coordinates output to influence global crude prices.
Plain-English explainer from The Dispatch Investors Encyclopedia. General information, not financial advice.