US-Israel Strikes on Iran: Impact on Middle East & Asia Refined Products Prices

Asia-Middle East Light Ends

• Aggressive Spot Price surge across all refined products: Propane Japan CFR +21.5% (+$134.25/MT), Naphtha Japan CFR +12.4% (+$79.00/MT), and Gasoline Singapore 92 RON FOB +12.98% (+$10.37/BBL). Physical premiums are at record highs as buyers scramble for non-Middle East Gulf cargoes.
• Acceleration of Bullishness: LPG market sentiment has been bullish since start of the year with strong seasonal demand and US export delays. Situation in the Middle East brings about further LPG supply tightness and logistic challenges. Naphtha and gasoline are also pushed into bullish territory with immediate market volatility.
• Higher Freight cost: Very Large Gas Carriers (VLGCs) transit is disrupted as shipowners amid heightened transit risks. Risk premium and demurrage charges are being factored in. Freight from Middle East Gulf to Japan rose by 36.06% to $111/MT. US Gulf to Japan is also marked higher by 9.04% to $160.83/MT.
• Physical Risk compared to June 2025: Current situation is more severe than June 2025 as we are facing physical supply disruption. Exports out of Juaymah had already been curtailed by equipment failure (23 Feb, pre-conflict). The Ras Tanura refinery shutdown will tighten supply of gasoline and naphtha in the region. Suspension of Qatar’s LNG and associated products, including LPG will significantly cut LPG availability from the country, whose current LPG exports stand at around 10MT/year.
• Forward Curves: Shifted into extreme backwardation. The March/April swap spreads for Propane and Naphtha Japan reached +$75/MT and +$30.25/MT, strong reflection of current markets sentiment.
• Liquidity & Trading: High paper liquidity seen on Monday for front month. Propane spot premium for 1H April delivery rose to above $90/MT as Saudi Aramco’s term buyer struggle to replace their cancelled term cargoes. Physical liquidity may dry up if the conflict prolongs as high prices for naphtha and LPG will further erode petrochemical margins

Asia Middle Distillates

• Gasoil 10ppm and Jet Fuel Singapore FOB Cargoes prices surged over 20% from 27th February to 27-months high of $114.851/b and $114.190/b on 3rd March respectively.
• These moves are significantly larger than during the 12-day war between Iran and Israel (12-24 June 2025), when prices surged 10% at the height of the conflict between 13-19th June 2025. Gasoil 10ppm was seen at $97.532/b and Jet Fuel at $95.478/b.
• The Mar/April spread which was already backwardated in February further widened to $6.02/b and $7.82/b respectively, 6 times the value on 27th February, indicating steeper prompt backwardation on general supply concerns.
• Middle Distillate cracks to Dubai for Gasoil 10ppm and Jet Fuel have risen significantly to $34.051/b and $33.390/b, a more than 10% increase:
  • This may be attributed to difficulty in acquiring prompt crude feedstocks by refineries as the Strait of Hormuz situation restricts crude supply.
  • Risk premiums may also be included in freight movement that accumulates towards a higher landed refined product cost.
• The US-Iran conflict further restricts Europe’s options for middle distillates as they have been heavily reliant on the Middle East and the US for refined products since the sanctions on Russian-origin refined products. If the situation persists, Europe may have to seek alternate import options in the Americas or Asia. This reshuffle in the global supply chain may have a knock-on effect and hence further uplift Asia Middle Distillate prices.

Asia Fuel Oil

• Singapore 0.5% VLSFO and Singapore 380cst HSFO have increased by 11.50% and 17.58% to US$561.46/MT and US$499.96/MT, respectively.
• Singapore 380cst HSFO had already rallied +16.7% month-on-month in Feb before the event; the 2-Mar print adds a further +18.0% above the Feb average in a single session.
• These moves (+US$74.77/mt for 380cst HSFO) significantly exceeds the June 2025 initial response (+US$27.64/mt for 380cst HSFO), when Hormuz was threatened but remained open.
• Singapore LSFO market is expected to experience significant supply tightness as Kuwait and UAE collectively account for 30% of February arrivals to Singapore. Meanwhile, Singapore HSFO could also lose fuel oil supplies from UAE and Saudi Arabia, which combined attributed to 24.20% of HSFO arrivals to Singapore in February, according to shipping intelligence firm Vortexa.
• Market sources suggested that spot bunkering trades remain active as vessel operators try to avoid further market risks and secure their fuel prices.
• Both 0.5% VLSFO and 380cst HSFO remained in steep backwardation as of 2 March, with the 380cst HSFO M1–M6 backwardation more than doubled from $18.54 to $43.08/mt, signalling a prompt supply disruption rather than a structural shift as of now.