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Market Chatter: Asian Refiners Mull Slowing Refineries if US-Iran War Impact Widens

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Asia's crude oil refiners could reduce run rates and see exports restricted as the intensifying war in the Middle East drives oil prices higher and puts a deeper dent in fuel stocks, Bloomberg reported on Wednesday, citing trade sources with knowledge of the mooted plans but without authorization to discuss them.

Refiners in China and India in particular are looking at the possibility of slower throughput as prices soar and at potential prioritization of their domestic markets if crude flows tighten further, the article said. China's diesel stocks are at a 15-month low and gasoline reserves at the lowest since 2022 at least.

This would reflect the approach the countries took in the first weeks of the US-Iran war when refineries slowed due to a shortage of crude while China and Thailand also reduced fuel exports. Consideration of such defensive measures have been spurred by Houthi land seizures in and around the Red Sea and an attack on Saudi Arabia's East-West Pipeline, until now a steadfast alternative to the Strait of Hormuz.

The discussions remain preliminary with no decisions taken. One key variable the market is watching is the fate of the East-West pipeline with media reports quoting officials and experts offering guesstimates for this within a few days or in up to six weeks.

(Market Chatter news is derived from conversations with market professionals globally. This information is believed to be from reliable sources but may include rumor and speculation. Accuracy is not guaranteed.)

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