Asia’s Refined Prices Down as US, Iran Reach Deal
Prices of refined products fell in Asia as news of an interim U.S.-Iran peace deal which could reopen the Strait of Hormuz triggered a decline in oil prices.
The movements followed news on Sunday that a memorandum of understanding had been reached, with the signing set to take place on Friday.
The August Brent swap contract slipped to $83.64/bbl on Monday at 9:30 a.m. Singapore time from $85.90/bbl at the close of Singapore trading at 4:30 p.m. on Friday, based on brokers’ opening swap numbers.
Fuel Oil
For the balance month of June, fuel swaps for 380 CST high-sulfur fuel oil dipped to $514.24 per metric ton at the Singapore opening from $534.21/mt at the close of trading on Friday. Meanwhile, 0.5% very low-sulfur fuel oil slipped to $629.67/mt from $651.25/mt over the same period, according to brokers’ estimates.
Among countries in the Middle East Gulf, Saudi Arabia exported 104,000 b/d of fuel oil, while Kuwait had zero fuel oil exports after the start of the war in March, compared to 139,000 b/d from Saudi Arabia and 231,000 b/d from Kuwait in February, according to data from the Joint Organizations Data Initiative or JODI.
JODI has no data available for other countries in the Middle East Gulf region.
Gasoil and Jet Fuel
The morning swaps for gasoil and jet fuel prices for June, the current front month, opened at $121.55/bbl FOB Singapore and $121.50/bbl FOB Singapore, respectively, softer compared to the closing swaps on June 12 at $125.57/bbl FOB Singapore and $126.58/bbl FOB Singapore.
The July crack values to Dubai crude swaps fell sharply in the morning to $41.63/bbl for gasoil and $41.13/bbl for jet fuel, compared to $44.65/bbl and $45.05/bbl, respectively, on June 12.
These values were higher than the closing values on March 2, the first trading day after the war broke out on Feb. 28.
The front-month closing swaps for gasoil and jet fuel were $112.37/bbl FOB Singapore and $115.67/bbl FOB Singapore, while the crack values were at $30.29/bbl and $31.80/bbl on March 2.
Trade flows for gasoil and jet fuel were disrupted soon after the war started and were gradually shifting back to the norm before the peace deal was announced.
China initially restricted exports of refined oil products in March but has since lifted the restrictions. In addition, China allocated extra export volumes of 500,000 mt in May and 550,000 mt in June to a list of countries that it deemed friendly.
South Korea imposed a cap on gasoil exports, limiting Korean refiners’ exports to the same monthly export volumes as the corresponding month in 2025. However, there has been no cap on jet fuel, and the high crack margins in recent months have pushed refiners to export as much as they can.
Gasoline
Gasoline swaps for the prompt balance month in June also declined, to $108.19/bbl at the Singapore opening compared to $110.10/bbl at the close of Singapore trading on Friday at 4:30 p.m., brokers said.
Gasoline exports from Saudi Arabia have suffered due to the closure of the Strait of Hormuz, with March exports declining to 230,000 b/d from 363,000 b/d in February, JODI data shows.
Most of Saudi Arabia’s gasoline exports are destined for the West of Suez, analysts said.
However, Kuwait’s gasoline exports increased to 17,000 b/d in March from 11,000 b/d prior to the war in February.
Lights Sentiment Upbeat
July LPG swaps opened at $660/mt, down from a close of $677/mt last Friday, as the market reacted to the announcement that the Strait of Hormuz could reopen.
Market participants were optimistic, expecting the agreement to ease supply chain disruptions that have reshaped global LPG trade flows since the onset of the Middle East conflict in late February.
The conflict prompted many Asian buyers to secure additional U.S. LPG cargoes amid reduced Middle Eastern volumes. The resulting surge in long-haul U.S.-Asia movements pushed freight rates sharply higher, weighing on arbitrage economics and contributing to a series of U.S.-Asia FOB cargo cancellations in recent weeks.
The OPIS-assessed Houston-Chiba very large gas carrier freight rates rose above the $300s/mt range in May before easing to close at $260/mt on Friday.
Sources noted four June-loading FOB cargo cancellations, as well as two July-loading FOB cargo cancellations and one cargo delayed to August.
“Middle Eastern volumes returning to the market would reduce Asia’s reliance on U.S. supply, ease pressure on freight rates and help rebalance the market,” one trader said.
The CFR Japan propane flat price was assessed at $705/mt on Friday, up 13% from pre-conflict levels, OPIS assessments show.
In naphtha, the CFR Japan July swap plunged to $680/mt as of 11:22 a.m. Singapore time, erasing all gains accumulated over more than three months as geopolitical risks eased, according to OPIS data.
Still, market sources remain in a wait-and-see mode. “Shipowners are still cautious and will wait for the agreement to be signed on Friday,” a shipping source based in Singapore said.
–Reporting by Thomas Cho, tcho@opisnet.com; Kite Chong, kchong@opisnet.com; Cheryl Lee, clee@opisnet.com and Yiwen ju@opisnet.com; Editing by Mei-Hwen Wong, mwong@opisnet.com