The prolongation of the Middle East conflict to the end of 2026 would reduce global crude runs by an estimated 1.4 million barrels per day in the fourth quarter, with Asia bearing the brunt of the disruption, according to Wood Mackenzie.
The conflict has reshaped Asian refining by disrupting crude supply routes, tightening product markets and altering the region's long-term competitive outlook, its report said.
Wood Mackenzie added that persistent Ukrainian drone attacks on Russian refineries have further restricted global refining output, with refinery unit outages reaching 3.5 million bpd in August.
"The scale of disruption to global crude runs is without modern precedent," Alan Gelder, Wood Mackenzie's SVP of refining, chemicals and oil markets research said.
Wood Mackenzie said elevated refining margins have been supported by constrained crude runs, while US and European refiners have deferred planned maintenance into 2027.
Diesel markets remain firm because of Russian export constraints, falling inventories and winter heating demand, while seasonal gasoline price weakness is expected to be partly offset by limited Atlantic Basin supply.
Asian refining margins are expected to ease once crude flows through the Strait of Hormuz resume. It forecasts Brent crude prices to fall into the $50-$60 per barrel range after transits are fully restored, as non-OPEC production growth outpaces global demand growth in 2027 and 2028.
The report also noted that Asia Pacific oil demand was not expected to recover to pre-conflict levels, at least until late 2027, after dropping 1.24 million bpd in 2026.
Petrochemical feedstocks, such as LPG and naphtha, have been the hardest hit, the report said, while road fuel demand remained resilient.
When markets eventually begin to normalize, analysts at Wood Mackenzie expect India to be the first major market in the region to surpass its pre-conflict demand levels, followed by Southeast Asia, while China's oil demand had likely peaked even before the conflict began.
Asia's crude import dependency is projected to rise to 82% by 2030, which is expected to translate to an additional 1.5 million bpd in imports.