The new round of disruptions pushes Asian naphtha tightness to new extremes

Commentary summary:

– E/W has widened to around +$80/mt for April, highlighting the need for more Western barrels into Asia.

– TC14 and TC15 roughly doubling since the start of the conflict yet arbitrage still works.

– NWE premiums are at their highest since May 2025, while NWE to Asia arb remains open on paper.

– West to East flows is increasing, including higher shipments from Europe to Japan and more Russian barrels into Taiwan and Korea. But not even close to narrow the gap with the loss of AG supply.

Fresh attacks on energy infrastructure in the Middle East have further tightened an already stressed naphtha market. The reported strike on South Pars is particularly significant for naphtha markets because condensate from the field underpins a meaningful share of Asian feedstock supply.

At a time when the market was already struggling with reduced availability from the Gulf, the attack has added a new geopolitical premium to a system that had very little buffer left.

The latest disruptions across the region have reinforced the sense that even alternative supply side solutions remain vulnerable, keeping buyers focused on security of supply and spreading the rumours of further export bans and political intervention.

The April MOPJ crack has moved above $8/mt, the highest seasonal value ever recorded for this contract, after a strong upward run over the past ten days.

The move reflects not only prompt physical tightness, but also the market’s growing conviction that Asian petrochemical feedstock players is running ahead of available supply.

In the same direction, E/W has widened sharply, with April now trading around +$80/mt, sending a stronger signal that the market still needs more Western barrels to move East.

TC14 and TC15 both have reachedtheir highest levels in years, around $80/mt, roughly double where they stood at the start of the conflict. Even so, the rally in E/W and cash differentials has been strong enough to absorb that freight increase.

(E/W and MOPJ cracks find new highs amid the ongoing lack of supply)

This is keeping arbitrage economics firmly in focus. The market continues to incentivise long haul movements from both Europe and the US into Asia, and our by origin economics still show that loading larger vessels for Eastern destinations is clearly more profitable than placing smaller cargoes in domestic or nearby markets.

NWE premiums have already climbed above $10/mt to their highest level since May 2025, and the unusual arbitrage from NWE to Asia remains open on paper. Flows are beginning to respond, with shipments from Europe to Japan already picking up.

Russian naphtha volumes are also returning into Taiwan and Korea, with March arbitrage levels set to reach their strongest point since last summer.

Even so, the increase in West to East flows remains only marginal relative to the loss of AG supply, which suggests the market is still far from rebalanced.

(Western players keep finding its best option in LR cargoes going to the East and the differential with local options widens)

The recent naphtha rally has narrowed the gas-nap spread, prices have come off by around $30/mt from the highs reached immediately after the attacks, but they still remain above pre attack levels for summer.

Gasoline has also started to reflect the broader regional dislocation. Atlantic Basin barrels are becoming increasingly competitive into Asia Pacific, with Houston and ARA cargoes workable into Australia, and ARA also competing into Indonesia.

Policy measures such as Australia’s temporary 50ppm waiver and South Korea’s cap on gasoline, diesel and heating kerosene exports are further evidence of how tight the regional fuels balance has become.

(Huge correction on gas-nap amid the strong naphtha rally. Summer values remain higher than pre-war levels)

Also, with the aim of relaxing market prices, the 60-day Jones Act waiver should add some flexibility to US domestic logistics, especially for distillates, but it does not materially change the broader picture for naphtha or gasoline.

More importantly, the fact that the US is now experimenting with softer market intervention measures is likely to keep concerns alive over possible harder steps later, including product export restrictions.

Overall, the market still points to the same conclusion: the imbalance remains unresolved. Asian demand is strong, AG supply is impaired, replacement barrels are not moving quickly enough.

Unless the supply situation improves meaningfully, current pricing signals suggest that naphtha prices and E/W are likely to keep escalating.