Asia's Refined Fuel Imports Plummet Amid Middle East Export Constraints
Asia's refined fuel imports hit their lowest level since the Iran conflict began in February. According to data from Kpler, Asia imported an estimated 5.10 million barrels per day (bpd) of light and middle distillates in August, down from 5.61 million bpd in July.
This drop represents a decline of about 2 million bpd from the average of 7.06 million bpd in the three months leading up to February 28, when the US and Israel launched aerial strikes against Iran.
The market focus has been on crude supplies due to the massive drop in shipments through the Strait of Hormuz. However, Asia's imports of refined fuels have adjusted to lower oil supplies, mainly with top buyer China slashing its imports by nearly 4 million bpd.
Refined product markets are under pressure due to losses of cargoes from the Middle East and Russia, which has curtailed fuel shipments after Ukraine successfully struck several of its refineries.
The profit margin for producing a barrel of gasoil in Singapore increased to US$67.93 on Monday, three times more than the US$21.90 that prevailed on February 27. Gasoline shows a similar dynamic, with the profit for making a barrel ending at US$27.47 last week.
The wide margins raise questions about market dynamics and why Gulf producers are running risks in shipping crude through both the Strait of Hormuz and the Bab el-Mandeb waterway when they could make more money moving refined products.