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Asian refineries slash output as Iran crisis chokes crude supplies

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Published20 MAY 26 - 15:32 Reading time  minutes

“What happens if you pay for this exorbitantly expensive crude and then peace breaks out tomorrow and all the product prices drop like a stone? What do you do then?” — Neil Crosby, Head of Research at Sparta Commodities

  • Expert: Neil Crosby (Head of Research, Sparta)
  • Publication: Financial Times
  • Market Focus: Crude Oil, Refining Margins, Jet Fuel, Distillates, Singapore Market
  • Geographies: Asia, Singapore, US, Middle East

In a recent analysis for the Financial Times, Sparta’s Head of Research, Neil Crosby, lays out the margin trap facing Asian refiners: extreme freight rates and physical crude premiums have made operations unprofitable, forcing output cuts across the region, while refineries that do pay up for expensive crude face severe losses the moment the conflict ends and product prices collapse. Singapore facilities are running below 50% capacity — the lowest since Covid — with Asian jet fuel exports at a five-year low of 440,000 b/d, down 30% since before the war. Crosby identifies only select US crude grades as currently profitable for Singapore refiners, with all other barrels generating losses. Traders should watch Singapore utilisation rates and the US crude arb closely as the key signals of where refinery economics go next.

[Read Neil Crosby’s full market commentary in the Financial Times]

Author

Neil Crosby

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