Margin in the East goes negative but is not sustainable
- The relentless rise in dirty freight rates and higher FOB differentials have caused forward Murban and Oman medium margins in the Far East to go deeply negative.
- Product cracks are in steep backwardation, which is also causing a headache for refiners looking to hedge their forward crude purchases.
- The diesel shortage in Europe would likely still be a big pull factor for ICE GO cracks to rise. With Asia now having more crude barrels flowing from the AG, the logical outcome is that they run hard and have excess diesel so that the E/W arb remains open.
- As dirty freight is expected to maintain a bullish stance and is unlikely be unwound so quickly, it will be up to the AG FOB diffs to start coming off as a signal for refiners to continue buying to load up their capacities in the East.
- Friendly reminder that China will be out for Mid-Autumn festival and Golden Week holidays, which should see lower crude buying activity in the spot markets.
(Medium cracking margins in the Far East)
(Diesel arbs from Sikka)
About the Author
June Goh | Senior Oil Analyst, Sparta Commodities
June is a senior oil market analyst at Sparta specialising in global crude trade flows and refining economics across Asia and Europe. Her analysis is regularly cited by Bloomberg, the Financial Times, and Reuters. With a significant following in the energy community on X (@JuneGoh_Sparta), June’s insights are a staple for institutional traders navigating regional market shifts.
Connect: LinkedIn / X
About Sparta
Sparta is the AI leader for commodity trading, home to Leonidas AI, the first decision-making engine for oil and commodity traders. Backed by USD 42 million in Series B funding led by One Peak, with participation from returning investors FirstMark and Singular, the same investors behind AI leaders like Legora, Dataiku, and Synthesia. From independents to multinationals, the world’s leading commodity teams use Sparta and Leonidas AI to move faster, trade smarter, and stay ahead of the market.
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