Asia’s Refining Margins Soar to 4-Year High as Hormuz Chokes Crude Supply

Group 1 - Disrupted crude flows from the Middle East to Asia due to the closure of the Strait of Hormuz have led to Asian refining margins reaching their highest level in four years, with Singapore complex refining margins surging to almost $30 per barrel [1] - Asian refiners, particularly state-held majors reliant on Middle Eastern oil, are contemplating reducing crude run rates by up to 30% due to the ongoing war in Iran, which has caused millions of barrels of crude to be stuck near the Strait of Hormuz [2][3] - China has instructed energy companies to suspend new fuel export contracts and cancel existing fuel shipments as global fuel markets tighten amid the conflict in the Middle East [4] Group 2 - The closure of the Ras Tanura refinery, which has a capacity of 550,000 barrels per day, following Iranian drone attacks poses further risks to fuel supply from the Middle East, particularly affecting diesel and jet fuel margins [4] - Diesel is experiencing the most acute physical pressure in the near term, with limited alternatives exacerbating supply risks compared to crude oil, jet fuel, and LNG [5]