Hormuz crude debate masks Asia's real refined fuel shortage
Asia's refined fuel imports are down 21% since February, with poorer nations bearing the brunt, even as the crude transit debate continues.
The public argument over how much crude oil is actually moving through the Strait of Hormuz may be missing the more pressing issue: a severe shortage of refined fuels in Asia.
US Energy Secretary Chris Wright has claimed that as much as 15 million barrels per day (bpd) exited the strait on a single day last week, and that seven-day averages were around 9 million bpd. Vessel-tracking services, however, estimate the real figure is closer to 5 million bpd, including dark transits and ship-to-ship transfers.
This debate, while heated, is ultimately resolvable. If the higher numbers are accurate, Asian ports should soon see a surge in crude arrivals, which are far easier to track than tanker movements.
The more immediate concern is the state of refined product markets. Kpler data shows Asia's imports of light and middle distillates—diesel, jet fuel, and gasoline—are estimated at 5.59 million bpd for August. That is a 21% drop from the 7.08 million bpd average in the three months before the US and Israel attacked Iran on February 28.
The pain is not evenly distributed. Indonesia's August imports are estimated at 432,000 bpd, the lowest in 13 months and down from a 533,000 bpd average before the conflict. The Philippines is expected to receive 257,000 bpd, down from 362,000 bpd.
Wealthier nations are faring better. Australia, the world's largest diesel importer, is securing nearly the same volumes as before, with August imports estimated at 863,000 bpd versus an 880,000 bpd pre-war average.
But even for those who can secure fuel, the cost is extreme. The profit margin for making gasoil at a Singapore refinery was $71.29 a barrel on August 21, down from a record $85.63 in March but still 226% higher than the $21.90 on February 27. Gasoline margins have also surged, up 159% over the same period.
The market's message is clear: even if crude is flowing, it may not be the right grades, and spare refining capacity elsewhere is not being deployed to fill the gap.