Asian Refined Fuels Market Remains Tight Despite Crude Oil Imports Recovery

Asia's crude oil imports are expected to return to pre-Iran conflict levels in June, but the market for refined fuels remains tight. According to data from Kpler, Asia's imports of crude oil are on track to reach 22.18 million barrels per day (bpd) in June, up from 20.35 million bpd in May. However, this is still below the average of 26.76 million bpd in the three months leading up to the February 28 attack on Iran.

The reopening of the Strait of Hormuz through which as much as 20% of global crude and refined products moved prior to the conflict will likely allow more oil to reach Asia in July, but China is continuing to limit imports. Kpler tracking shows only 5.76 million bpd of seaborne arrivals so far in June.

The market for refined fuels, such as diesel and gasoline, remains tight due to constrained flows and drawn-down inventories. This is reflected in prices, which have declined from record highs hit during the conflict but are still elevated relative to crude oil. The premium of fuels over crude has kept refinery margins high, with a typical Singapore refinery enjoying a profit of about $11.51 a barrel.