Conflict in Middle East fuels east-west divergence in gasoline

Commentary summary:

• Around 3 mb/d of clean product flows pass through Hormuz, with no viable pipeline alternatives.

• Naphtha remains the most exposed light product, with over 40% of global exports tied to the MEG.

• E/W gasoline spread for summer are trading at 3-year seasonal highs.

• East African opportunities keep rising for Europe on the back of a stronger E/W.

Israel and Iran exchanged fire for the fourth consecutive day on Monday, with the worst-case scenario for the crude and products market being an imminent disruption in the Strait of Hormuz, though that remains a tail risk for now. Yesterday, Iran reportedly signalled a desire to de-escalate, but the attacks have continued, and some geopolitical risk premium remains embedded in oil prices.

Philip Jones-Lux is Senior Analyst for Sparta. Having worked with organisations such as JBC Energy and RP Global, Philip is a seasoned energy market analyst with expertise across the oil barrel and power markets

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