n commodities trading, “crack” refers to the oil refining process where crude oil is “cracked” into lighter petroleum products such as gasoline, diesel, and heating oil. This thermal or catalytic process breaks down heavy hydrocarbon molecules into more valuable refined products. The term is also used in crack spread trading strategies.

The cracking process is fundamental to petroleum economics, as refined products typically command higher prices than crude oil. Refiners profit from the price differential between crude oil inputs and refined product outputs. Seasonal demand patterns, refinery maintenance schedules, and environmental regulations all influence cracking economics and create trading opportunities in energy markets.

Real-world example: During summer driving season, strong gasoline demand widens crack spreads to $20 per barrel, prompting refiners to maximize gasoline production and traders to buy crack spread positions.