Hormuz attacks keep tightening the light ends picture

Fresh attacks on shipping have re-tightened the Hormuz picture. Oil extended gains after a new exchange of strikes on vessels between the US and Iran, with blasts heard near Kharg Island over the weekend amid reports of a tanker hit. Last week’s escalation already included a tanker struck by sea mines and US strikes on Iranian mine-laying vessels. Transit remains well below pre-war norms.

The naphtha E/W has broken to new highs and is pulling Western barrels East, lifting Houston and European premiums. E/W Nap closed at $56/mt at the widest since July, with the arb now open from the US Gulf and from Europe routed via the Red Sea.

US Gulf light sour naphtha premium is trading at 14cpg after a 4cpg rally and the Mont Belvieu C5 spread is up 20% on the week. Sellers on both sides of the Atlantic now have a genuine Eastern outlet competing with local demand, and MOPJ holding a positive crack at +$2.70/bbl shows the East is paying up.

E/W gasoline has rallied hard, reinforcing the light ends complex, up $7/bbl over the last week for October contract, and a sharp recovery off the ten-year seasonal lows it reached when Hormuz flows briefly improved.

Pro/Nap East has recovered to -$53.50/mt, up almost 40% over four weeks. Aramco set the September CP at $625/mt for propane and $660/mt for butane, and has told regular Asian customers it will not supply propane at all in H1 2027 due to maintenance while continuing to offer butane. H2 September cargoes trading in the high $200s to mid $300s/mt over the CP, the switching option is closing for flexible crackers, pushing them back toward naphtha.

The whole light ends complex is rallying and the tightness is concentrated East of Suez. Hormuz transit stays well below pre-war norms with attacks continuing, AG product flows are constrained by escort capacity rather than production, and the LPG leg is losing supply structurally rather than temporarily. Naphtha and gasoline E/W have both broken to new highs and Asian buyers still have an October gap to cover. With the West already pricing the pull and no diplomatic track in sight, the path of least resistance across light ends is higher.

About the Author
Jorge Molinero | Commodity Owner, Light Ends & Gasoline, Sparta Commodities
Jorge is Sparta’s Commodity Owner for gasoline and light ends. He began his career as a financial analyst at BBVA before spending four years as a naphtha analyst at Repsol. His market analysis is cited by Reuters, Bloomberg, and Financial Times.
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