Sanctions, shutdowns and economic revival fuel strong naphtha recovery

Naphtha rally extends as Asia and Europe hit new timespread highs

• Contango has disappeared in Europe, while Asian timespreads have surged to multi-year highs for late 2025 and Q1 2026.
• Physical Asian premiums have rallied sharply since the sanctions announcement, reaching new highs in prompt arbitrage margins since August.
• The recent forced shutdown of Al Zour has amplified tightness, further supporting E/W highs in recent sessions.
• The replacement of Russian and AG barrels is now the key market driver, with most indicators at their strongest since last summer.

The naphtha market continues to rebound strongly, driven by sanctions on Russia and the upward trend in the crude oil markets. The contango has evaporated in Europe, and in Asia the trend is even stronger, with timespreads reaching highs for the remainder of the year and Q1 2026. European cracks are also finding support after recent declines, although still below the summer highs, while in Asia, from November onward, they are reaching year-to-date highs.

Jorge Molinero is Commodity Owner for Gasoline at Sparta. Starting his career as a financial analyst with BBVA, Jorge quickly transitioned to market intelligence within the energy sector, spending 4 years as a naphtha analyst with Repsol before joining Sparta in early 2023. 

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