Asia’s imports of crude oil recovered in October to match levels prior to the Iran conflict, but in a sign that the real stress in energy markets is in refined products, imports of fuels such as diesel and gasoline remained soft.
The top energy-importing region saw crude arrivals of 26.39 million barrels per day (bpd) in October, up from 24.24 million bpd in September, according to data compiled by commodity analysts Kpler.
The October figure was also just shy of the average of 27.0 million bpd in the three months leading up to the February 28 attack by the US and Israel against Iran, and up 39% from the 18.93 million bpd post-conflict low in April.
The recovery in Asia’s crude imports comes as exporters from the Middle East boosted shipments through the contested Strait of Hormuz, running the risk of missile and drone attacks by Iran in exchange for reaping high prices for oil.
Asia’s crude imports via the Strait of Hormuz rose to 7.42 million bpd in October, still down from the average of 13.06 million bpd in the three months to the end of February, but some 366% higher than the 1.59 million bpd low from April.
Outside of suppliers from the Middle East, Asia’s imports from Russia rose to 3.50 million bpd in October, according to Kpler data, up from 3.15 million bpd in the three months to the end of February.
Arrivals from the Americas were 4.16 million bpd, the same as in the three months to the end of February, although Kpler data is showing a large increase in imports in November, with 6.29 million bpd expected.
The recovery in crude imports is masking the real issue for Asia’s liquid fuels markets, which is tightness in the supply of refined products.
FUEL IMPORTS
Asia’s imports of light and middle distillates were 6.15 million bpd in October, up from 5.88 million bpd in September, but still 10% below the average of 6.85 million bpd in the three months to the end of February.
The loss of refined products from refineries in the Middle East is still being felt, with imports of light and middle distillates coming in at 1.69 million bpd, down 18.4% from the 2.07 million bpd average in the three months prior to the start of the Iran conflict.
However, Asia’s total imports of light and middle distillates have risen 16.7% from the post-conflict nadir of 5.27 million bpd in June, largely because the continent has been able to source more diesel and gasoline from suppliers outside the Middle East.
Imports of light and middle distillates from the Americas rose to 225,000 bpd in October from 173,000 bpd in the three months leading up to the start of the war, while those from Africa reached 294,000 bpd in October from 224,000 bpd in the three months to the end of February.
The improvement in imports of light and middle distillates has resulted in some retracing of the high prices, although they remain at elevated levels.
The price of gasoil, the building block for diesel, in Singapore ended at $168.62 a barrel on October 30, down from the record $199.89 hit on March 30, but still 84% higher than the $91.42 that prevailed on February 27.
Singapore gasoline ended at $127.64 a barrel on October 30, down from the record $151.60 on March 23 but up 61% from the $79.30 on February 27.
Asia is the region most dependent on crude and refined fuels from the Middle East, buying about 80% of the pre-war volumes.
What the October import figures show is that the US and the non-Iran exporters have had success in lifting volumes of crude exports from the Middle East.
Where they are still lagging is in shipments of refined fuels, and the high prices are a reflection of constrained supply of diesel in particular, not just from the Middle East, but also from Russia, whose refineries have been targeted by Ukraine.
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The views expressed here are those of the author, a columnist for Reuters.
(Editing by Muralikumar Anantharaman)