Asia’s imports of refined petroleum products declined sharply in August amid ongoing conflict involving Iran that has disrupted supply routes in the Middle East. Data compiled by commodities analyst Kpler show that the region’s intake of light and middle distillates fell to an estimated 5.10 million barrels per day (bpd) last month, down from 5.61 million bpd in July and significantly lower than the pre-conflict average of 7.06 million bpd recorded in the three months before February 28. On that date, the United States and Israel launched aerial strikes against Iran, initiating heightened tensions in the region.

While much attention has focused on crude oil shipments—especially the reduced flow through the Strait of Hormuz, a strategic chokepoint that previously handled almost 20% of global oil exports—there is ongoing debate about the exact volume of oil still passing through the strait. The U.S. Energy Secretary has claimed that as much as 9 million bpd continues to move through the passage, though several vessel-tracking services dispute this figure, estimating less than half that amount.

Despite these disputes, market observers note that the immediate concern for Asia’s energy sector lies less with crude oil volumes and more with refined fuel supplies. Asia, which accounts for approximately 90% of Middle East crude demand, has adapted to lower crude availability primarily by cutting back imports, particularly China which has reduced its intake by nearly 4 million bpd, and by drawing down emergency stockpiles. However, the supply of refined products—such as diesel and jet fuel—has faced additional pressure. This is due not only to disruptions in shipments from the Middle East but also to a significant curtailment of Russian fuel exports following Ukrainian strikes on several Russian refineries.

The tight availability of refined fuels is being reflected in rising prices and widening refinery margins in key oil hubs. In Singapore, a major petroleum trading center, gasoil prices climbed to $155.15 a barrel, up 70% from $91.42 on February 27, the day before the conflict began. Refiners in Singapore are now realizing profit margins of approximately $67.93 per barrel of gasoil, triple the $21.90 margin from late February. Gasoline markets show a similar trend, with production margins increasing from $8.00 to $27.47 per barrel in the same period.

This sharp increase in refining profits prompts questions about the current market dynamics. Industry analysts are exploring why Gulf producers continue to risk crude shipments through hazardous routes like the Strait of Hormuz and Bab El Mandeb when refining and exporting higher-value petroleum products might yield greater returns under present conditions.