Asia’s jet-fuel market saw extreme volatility in the wake of disruptions to supply of refined products following the US/Israel attack on Iran, with its price spread to diesel surging to unprecedented levels of above $100/bbl.
The prompt April regrade contract swung upwards by over 300% from a premium of just $3/bbl before the Asian pricing window on March 4, peaking at $115/bbl and settling at around $50 overnight.
In early Asian trade on March 5, the contract surged above $100/bbl again, hitting as high as $140/bbl, holding a bid/offer range of $100/120 around midday and before easing to $60/75 later.
Since the attack started, tankers have been unable to exit or enter the Middle East Gulf, with Iran randomly targeting merchant vessels plying the Straits of Hormuz and already having hit several tankers.
On average, about 20 million barrels of oil are shipped through the Straits daily, according to the International Energy Agency, amounting to nearly a quarter of all seaborne oil trade globally.
The Middle East countries that export from the Gulf, mainly Saudi Arabia, Kuwait, the UAE, Bahrain and Oman, are major suppliers of crude, diesel, jet fuel and fuel oil.
The region exported an average just over 2 million mt of jet fuel in the period between January 2025 and last month, with Kuwait as the largest exporter, accounting for nearly 40% of the total, followed by Saudi Arabia and the UAE.
Jet loadings fell to a trickle in March, in the aftermath of the US/Israel attack on Feb. 28, with only five loadings, from Kuwait, Saudi Arabia and Oman, seen so far.
Wood Mackenzie believes that the price surge in the April regrade contract was triggered by the second Iranian attack on Saudi Arabia’s Ras Tanura, which houses the kingdom’s largest refinery and its major export terminal, which coincidentally occurred around the same time as the Asia pricing window.
The regrade surge is likely to have been started by players who had early intel on the Ras Tanura attack and bought up the contract opportunistically but it gathered momentum when levels hit and triggered stop-loss levels by other player who have shorted the contract, leading to the consequent frenzy.
Ironically, the Ras Tanura facilities sustained no damage and that there is no disruption to supplies, according to official sources.
Wood Mackenzie believes that this bout of volatility is a sign of things to come, with major players globally discouraging or outright banning exports of refined products.
China is the latest to do so, with the government “urging” its exporters to suspend or cancel March-loading cargoes and not to sign any new export contracts. China is a major exporter of diesel and gasoline, with their cargoes flowing mainly to East Asia buyers such as Australia.
Price benchmarks for other products such as fuel oil, diesel and naphtha have all jumped.
High- and low-sulphur fuel oil’s Apr/May intermonth spreads have averaged respectively at near $17/mt for both, the highest month-average in over three years, while naphtha’s timespread averaged at a 5-year high of $33.88/mt, well above the February average of around $10/mt but diesel rose more modestly, averaging at just over $6/bbl, up from just $1/bbl for Feb and its highest since July 2022.
