Analysis-Mideast War Escalation Threatens Recovery in Global Oil Refining
Houthi threats could force more than 3 million barrels a day of Saudi crude onto longer routes as refiners run near capacity, Energy Aspects said.
- On Tuesday, three tankers carrying Saudi crude bound for China and India made U-turns toward the Suez Canal as Yemen's Iran-aligned Houthis threatened to block Red Sea exports, potentially diverting more than 3 million barrels daily on much longer routes.
- The re-escalation of U.S.-Iran hostilities collapsed a ceasefire that had briefly reopened the Strait of Hormuz, stalling crude traffic to the lowest level since May and threatening the expected ramp-up of fuel output in the third quarter.
- Asian refiners who had lined up August crude supplies now brace for delays; Taiwan's Formosa Petrochemical Corp planned 480,000 bpd, or nearly 90% capacity, but President K.Y. Lin said delivery and arrival of some cargoes remain uncertain given the resumption of Middle East conflict.
- Lofty fuel prices have propelled refinery profit margins to record highs, with Asian gasoil and jet fuel margins jumping to more than $65 a barrel and the U.S. benchmark rising to close to $70 late last week, prompting analyst Neil Crosby to warn margins will stay high.
- China's refinery throughput is projected to climb to 13.96 million barrels daily in August, positioning the country to fill the global supply gap with its large crude stockpile and capacity to ramp up output despite Middle East uncertainty.
12 Articles
12 Articles
Cutting off Red Sea oil route may be one crisis too many
The Red Sea conflict has disrupted oil flows, impacting global energy markets. This escalation is now forcing oil tankers to reroute, increasing transit times significantly. Asian refining output has plummeted, and China's recovery faces new challenges. Soaring fuel prices are reducing global oil demand, affecting economic activity. The world faces a more damaging and economically painful energy crisis phase.
Low inventories and surging geopolitical risks keep fuel prices elevated
The escalating US-Iran war threatens Asian oil refiners’ plans to ramp up output in August, which could keep global fuel stocks tight and bolster prices for longer unless China fills the gap. Asian refiners, counting on steadier oil supply, had been expected to lead a recovery in global fuel production this quarter, but attacks between […]
Mideast war escalation threatens recovery in global oil refining
The resumption of U.S. hostilities against Iran in the last two weeks, with the re-establishment of the naval blockade in the Strait of Ormuz, has hit an already fragile energy market. This new shock has not only raised crude oil prices but has exacerbated multiform changes in the global refining system. The interruption of oil flows is combined with a context of a drastic drop in production in Russian refineries by Ukrainian attacks and a recor…
(Seoul = Yonhap News) Reporter Jung Joo-ho = As the conflict in the Strait of Hormuz intensifies again, refining margins worldwide—not only in the U.S. but also in Europe, the Middle East, and Russia—have simultaneously hit record lows...
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