Asia's Oil Industry Prepares for Extended Disruption

The Asia-Pacific crude oil industry has a straightforward solution to end the current crisis caused by the Iran conflict: have US President Donald Trump withdraw from the Gulf region. However, this is unlikely to happen as the conflict shows no signs of nearing a political resolution.

The Strait of Hormuz is a critical waterway that nearly 20% of global crude oil and refined products pass through before the recent tensions began. Although volumes have partially recovered, they are still around 75% below pre-war levels, resulting in a daily loss of about 5 million barrels of crude and refined fuels.

The real crisis lies in the supply of refined products, with Asia's imports of light and middle distillates down nearly 30%, or about 2 million barrels per day. The industry initially expected the conflict to be resolved within weeks or months but has since shifted its focus to navigating a prolonged disruption.

APPEC delegates, who include Middle East oil producers, trading houses, shippers, and refiners, believe that Trump's inability to accept anything less than a victory will lead to an extended crisis. They also expect regime change in Washington before a political settlement can be reached, which could take up to two-and-a-half years until Trump's term ends.