- Asia’s crude imports are rising as Strait of Hormuz flows recover, but volumes remain below pre-conflict levels.
- Refined fuel exports remain 13% below pre-conflict levels, keeping diesel, gasoline and jet fuel prices elevated.
Asia’s crude oil imports are recovering toward pre-conflict levels, but refined fuel supplies remain constrained across the region, according to data compiled by commodity analysts Kpler.
Asia is expected to import about 22.18 million barrels per day (bpd) of crude in June. That compares with 20.35 million bpd in May. However, June imports remain below the 26.76 million bpd average recorded in the three months before the February 28 attack on Iran by the United States and Israel.
The recovery marks a sharp improvement from April. Asia imported just 18.77 million bpd that month as the conflict disrupted traffic through the Strait of Hormuz.
The reopening of the waterway could support further crude flows into Asia in July. Before the conflict, the strait handled as much as 20% of global crude and refined product shipments.
However, China continues to limit crude imports. Kpler has tracked 5.76 million bpd of seaborne arrivals so far in June. The figure could rise as analysts record additional cargoes, but it remains well below pre-conflict levels.
China’s seaborne crude imports fell to 6.78 million bpd in May, the lowest level since February 2018. The figure also stood well below the 11.37 million bpd average recorded during the three months before the conflict.
Meanwhile, refined product flows have recovered more slowly. Asian refiners are expected to export about 9.20 million bpd of light and middle distillates in June. That represents an increase from 6.99 million bpd in May and 6.28 million bpd in April.
Despite the improvement, June exports remain 13% below the 10.56 million bpd average recorded before the conflict. Several Asian markets have also drawn down fuel inventories, keeping supplies of diesel and gasoline tight.
Fuel prices continue to reflect those supply constraints. Brent crude futures closed at $80.57 per barrel on June 19. The price remained 11.2% above its February 27 level but stood 36.3% below the conflict peak of $126.41 recorded on April 30.
Jet fuel has faced particular pressure because it generally carries smaller inventory buffers and degrades faster than other fuels. Singapore jet fuel closed at $112.49 per barrel on June 19, 20.4% above its pre-conflict price of $93.45.
Gasoil, a key diesel component, ended the week at $111.61 per barrel. That represented a 22.1% increase from its February 27 price of $91.42. Gasoline closed at $103.56 per barrel, 30.6% above its pre-conflict price of $79.30.
As crude arrivals improve, Asian refiners could increase processing rates and raise refined fuel supplies. Refinery margins remain elevated, with a typical Singapore refinery earning about $11.51 per barrel, 34% above its one-year average of $8.59.
However, the pace of recovery will depend on continued crude flows through the Strait of Hormuz. Market confidence in the durability of the US-Iran ceasefire agreement will also influence supply and price movements.
For the medium term, vessel movements through the Strait of Hormuz will provide an important indicator of whether crude and refined fuel markets can return to pre-conflict conditions.