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Asia's refining margins soar to the highest level in almost 4 years due to disruption of supply caused by Hormuz
According to data and analysts, Asian refining margins are at their highest level since 2022 due to Iranian threats against shipping through the Strait of Hormuz. These threats have disrupted crude flow and forced refineries to reduce runs. As a result of the U.S. - Iran war, trade has been suspended through the chokepoint which typically handles over 20% of global daily oil supplies. Singapore's complex refinery margins LSEG data shows that the market was roiled on Wednesday by fears of a further reduction in refining runs, which could lead to a tightening of fuel supplies. China and Thailand also suspended their fuel exports, which could affect the supply of fuel in the region. JET FUEL, ?DIESEL MARGINS LEAD THE SURGE In Asia, jet fuel and diesel products saw the highest margins. LSEG data revealed that the margin for aviation fuel?broke $52 a bar on Wednesday, its highest level since June 2022. It was more than twice as high as it had been Friday. The price of 10ppm sulphur gasoline has risen to $48 per barrel, its highest level since August 2022. This is indicative of an imminent shortage of feedstocks for refineries due to the dependence on Middle Eastern crude oil that is currently clogged at the Strait of Hormuz, said June Goh senior oil market analyst of Sparta Commodities. Other sources of crude will arrive in our region between one and two months. Refineries must reduce their intake in order to avoid premature shutdown," Goh said, adding that oil products stocks would deplete rapidly if refineries did not receive crude soon. Asian refiners are meanwhile struggling to secure replacement crude cargoes. Some Chinese refiners are already cutting runs while India is looking for alternatives for crude imports. NAPHTHA, FUEL OIL Middle East also tops the list of suppliers for petrochemical feedstock, naphtha, and fuel oil for ship refuelling. Asia's naphtha market This week,?supplies tightened. Petrochemical producers in Asia's top producer are, however, preparing to stop operations and reduce run rates, as buyers prepare for delays and higher prices. On Wednesday, cracks in high-sulfur fuel oil reached a record-breaking price of nearly $8 per barrel. According to Vortexa, oil consultancy, residual?fuel exported from the Gulf must pass through Strait of Hormuz. This accounted for 9% of the global seaborne flow in 2025. The traders claim that global oil majors tried to 'cover fuel needs by shipping products from?West even if arbitrage economics were not feasible. Exxon Mobil will ship fuel to Australia from the U.S. Gulf Coast in order to meet its own import needs.
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China plans to reduce carbon dioxide emissions per unit GDP by approximately 3.8% in 2026
According to documents released by the Chinese government on Thursday, China will reduce its carbon intensity - or carbon emissions per unit gross domestic product - by 17% in its current five year plan. This is an acceleration of the previous period between 2020 and '2025. China's new five-year plan released on Thursday called for the replacement of 30 million metric tonnes per year with renewables, and pushing towards peak coal. However, it did not set further limits on coal use. China's carbon intensity was reduced by 12% during the five-year plan which ended last year. According to a report by China's National Development and Reform Commission, its top planner, China plans to reduce its carbon intensity in 2026 by about 3.8%. China expects its carbon emissions to peak before 2030. Some analysts were disappointed by the new carbon intensity goal. The Centre for Research on Energy and Clean Air conducted research that found China needed to 'accelerate the pace of reductions in carbon intensity to 23% within the next five-year period after falling behind its Paris Agreement commitment to cut carbon intensity by more than 65% between 2005 and 2030. "How fast carbon intensity can be reduced depends largely on how much renewable energy is available," said Yao Zhe, Greenpeace East Asia's policy advisor in Beijing. The NDRC report stated that China would also implement a mandatory minimum quota for renewable energy consumption in the next five-year period. In a speech last year to the United Nations, President Xi Jinping stated that China would increase its already largest wind and solar energy capacity by six times, from 2020 levels, to 3,600 gigawatts in 2035. China will likely exceed this target, based on current capacity building levels. China has yet to announce a clear target for emissions reductions by 2030. Xi stated in a speech at the United Nations last year that China will peak its carbon emission?by 2030, and reduce emissions between 7% and 10% by 2035. Carbon emissions in China fell by 0.3% last year, mainly due to the reductions made in the sectors of 'transport, power and cement. It is still unclear whether they will rise again before a peak. This year marks a planned shift from focusing solely on the energy intensity in its economy to focusing more on the carbon intensity. The NDRC's?plan did not provide any further details about the "dual-control" system or how it would work. The NDRC stated that it would make efforts to?replace coal with clean energy and?phase out outdated coal-fired facilities and equipment. It did not mention the previous commitment to phase out coal in the five-year plan from 2026 to 2030. The five-year plan states that China will strive to reach its peak coal and oil consumption during the period. (Reporting and editing by Christian Schmollinger, Thomas Derpinghaus and Lewis Jackson)
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Reliance shares lead the rise in Indian stocks after a three-session decline
Indian shares rose in morning trading on Thursday. A rebound in Reliance, and a rally in global stocks helped the market. Risk appetite had improved after the war in the Middle East, which had dragged down shares for the remainder of the week. As of 10:02 a.m. IST, the Nifty 50 index was up 0.61% to 24,631.3, and the BSE Sensex gained 0.54%, reaching 79,530.98. Over the last three sessions, both benchmarks dropped by about 4%. Avinash Gorakshakar is the director of research for Profitmart Securities. He said that while the markets may have staged a partial rebound after the recent sharp fall, it's not a trend reverser as the overhang caused by higher crude prices still remains. Gorakshakar stated that the pullback in the Middle East conflict has created more attractive entry points for domestic sectors. Fourteen out of 16 major sectors posted?gains. Small-caps, which are more focused on domestic markets, rose by about 1%. Reliance Industries, the index heavyweight, rose by 3% following a drop of 4.5% over the previous three sessions. Analysts led by Dayanand Mittal at JM Financial said: "We think the recent correction in Reliance's stock price is overdone. The recent spike in crude and liquefied gas prices won't negatively impact Reliance." Reliance's share price and that of upstream oil companies like ONGC and Oil India drove energy and oil and -gas indexes 2% upwards. MSCI's broadest Asia-Pacific index outside Japan rose by?2.6% after falling?8.6% in the previous three sessions. After overnight gains on Wall Street following a New York Times article stating that 'Iranian Intelligence operatives indirect reached out to CIA a Day?after attacks, the rise was followed by gains in the next day. U.S. officials are sceptical about the prospect of a near-term deescalation. Crude oil prices rose 3.2% to $84 per barrel after ending Wednesday with little change. Higher oil prices are usually negative for India, the third largest crude importer in the world. Ramky Infra, a stock that rose 13% among stocks after receiving a large order of 14.02 billion rupees. (Reporting and editing by Vivek M and Bharathrajeswaran, Sumana Nandy and Sonia Cheema; Harikrishnan Nair).
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China targets commodity overcapacity again
China said on Thursday that it would take action against overcapacity, particularly in the?steel and oil refining industries?, and other heavy industries. This is a reiteration of some of the promises made last year, as the largest commodity producer struggles with persistent oversupply. According to a report by the national planner, the National Reform and Development Commission (NDRC), the country will reduce its capacity in the steelmaking, oil-refining, and other unspecified sectors in a planned manner. The NDRC said that capacity would also be managed for copper smelting,?the alumina, and coal chemical industries. However, it did not say explicitly that it would be'reduced', like it did with steel and oil refinery. There were no?specific?plans or?numerical?targets for any industry. Beijing has been aiming to reform its steel industry for many years, but this year's language is less specific than the language used at the National People's Congress' last annual meeting. Beijing pledged to restructure its steel sector in March 2025 by cutting production. A number of copper smelters that were planned for late last year have also been shelved. STOCKPILING China relies heavily on the?importation of?raw material such as copper concentrate and iron ore. It has tried to increase domestic?supply in order to reduce these incoming shipments. China announced on Thursday that it will intensify its efforts to explore, stockpile and develop strategic mineral resources. China said that it would also?continue strengthening and building its secretive strategic commodities stockpiles, without providing any details. Reporting by Amy Lv, Lewis Jackson and Tom Hogue; Editing by Christopher Cushing & Tom Hogue
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Media report that a Pakistani man claims Iran forced him to plot Trump's murder.
Media reported that a Pakistani man who was accused of plotting to kill Donald Trump told jurors Wednesday that he had not "willingly" worked with Iran's elite Islamic Revolutionary Guards Corps in order to devise the alleged plan. Asif Merchant was accused by the Justice Department of trying to recruit Americans in the United States for a plan that targeted Trump and other U.S. political figures in retaliation against Washington's killing Qassem Solimani, the Corps' chief commander. The Corps plays a key role in Iran with its combination of military and economic power, and intelligence network. Merchant told a court in his trial for terrorism charges and murders-for-hire that he was reluctant to take part. He said he did it to protect his family. According to a?letter?sent to the judge of the case from 2024, prosecutors rejected Merchant's?claim citing a?lack evidence supporting a real duress or?coercion. Merchant told the newspaper that he was never ordered to kill anyone in particular, but his Iranian handler had named three individuals during conversations in Tehran. Along with?Trump's name, there was Joe Biden who was the president of the United States at the time, and Nikki Haley who unsuccessfully ran for the Republican nomination in the 2024 presidential election. Merchant's lawyers did not respond immediately to a request for comment. The White House didn't immediately respond to a request for comment. The trial began last week, just days before Trump ordered the strikes against Iran that Israel carried out to kill Supreme Leader Ayatollah?Khamenei as well as top officials of Middle Eastern nation. Trump said, "I got Khamenei before he got to me," when he spoke on Sunday with ABC News about a joint U.S. and Israeli operation that killed Khamenei. Tehran has denied allegations that it targeted Trump or other U.S. officials. Reporting and editing by Donna Bryson, Clarence Fernandez and Jasper Ward.
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China's economic promises lead to a spike in iron ore prices
Iron ore futures rose on Thursday after China, the world's largest consumer, announced a series of economic measures to boost steel and iron ore demand. These included promises?to increase domestic consumption,?"curb overproduction" and energize the housing market. As of 0234 GMT, the most-traded contract for May iron ore on China's Dalian Commodity Exchange was trading 1.93% higher. It was 764 yuan (US$110.95) per metric ton. The benchmark iron ore for April on the Singapore Exchange was $101.04 higher, or 1.34% more. Investors are watching the annual Chinese parliamentary meeting and the 15th five-year Plan to gauge the demand outlook for steel. Beijing's economic growth goal for 2026 is 4.5%-5%. This is a slight drop from the 5% achieved last year, but still within analysts' expectations. Beijing has room to address weak domestic consumption as well as curb overcapacity in industry. The world's largest steel exporter also announced that it would increase efforts to eliminate outdated production capacity, and pledged to strengthen strategic resources reserves. China will also strive ?to stabilise the real estate market, take steps to improve housing supply and better utilise existing housing stock, including ?by purchasing unsold homes for use as government-subsidised housing. The?prolonged housing?market of the country used to be its largest consumer of steel. However, it has now ceded that position to manufacturing. Stimulus aimed at the housing market could boost steel and iron ore consumption. Coking coal and coke both fell by 0.72% and 0.81% respectively. The benchmark steel prices on the Shanghai Futures Exchange rose. The rebar price rose by 0.26%. Hot-rolled coils increased by 0.16%. Wire rod remained stable at 0.99%. Stainless steel rose 0.36%.
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Asian shares rise, led by KOSPI. Treasuries drop as war fears ebb.
Asian shares rose on Thursday, with a drop in U.S. Treasuries signaling a tentative return of risk appetite which has been severely impacted by the escalating conflict?in the Middle East. South Korea's KOSPI index recovered from its steep losses during the previous?session?after a Wall Street rally in hopes that the United States will negotiate with Iran to end hostilities. Gold and oil traded higher. China's growth target was set at a slower pace in an economic plan that is closely monitored. The U.S. Senate backed Donald Trump's campaign against Iran. This suggests that there will be no quick resolution of a war which has roiled the financial markets, transport networks and energy production. In a note, Paco Chow, a dealing manager for Moomoo Australia & New Zealand, stated that "Geopolitical risks can flare-up again very quickly." "The outlook is cautious until oil flows return to normal." The broadest MSCI index of Asia-Pacific stocks outside Japan rose 2.9%. South Korea's KOSPI topped regional benchmarks, with a 10.4% increase. Japan's Nikkei also rose 2.9%. The yield on the benchmark U.S. 10 year?notes increased 2.7 basis to 4.109%. Meanwhile, the yield of 30-year bonds rose 3.1 basis to 4.7479%. On Wednesday, the U.S. and Israel war?on Iran grew dramatically after a 'U.S. A submarine sank a warship of Iran and NATO air defences destroyed a ballistic missile that was fired by Iran towards Turkey. The equity markets of Europe and the U.S. were comforted by Trump's promise to protect shippers, and a New York Times article that Iranian intelligence had contacted the CIA in early wartime to discuss a way to end it. Iran rejected the report later, and in the U.S. the Republican-led Senate blocked a bipartisan resolution to end the air war. Oil prices continued to rise due to concerns about the energy supply. U.S. crude climbed 3.01% to $76.21 a barrel. Brent rose 2.49% to $83.43 a barrel. Spot gold rose by 0.84%, to $5178.42 per ounce. Henry Russell, a London-based economist at ANZ, stated on a podcast that the market is still largely driven by headlines. We're also likely to see more volatility in the future. "We are still seeing energy supply facing constraints, with production facilities being taken offline. More will follow if the conflict continues." China has set its 2026 economic growth goal at 4.5% to 5%. This is a slight drop from the 5% rate achieved last year. However, this still leaves room for efforts aimed at curbing industrial overcapacity, and rebalancing the economy. Beijing released its 15th 5-year plan and pledged investments in high-tech industries as well as a "notable increase" in household consumption. China's blue chip CSI300 index gained almost 1% during early trading. The Shanghai Composite Index also added 0.4%. After recent gains due to safe-haven demand, the greenback has taken a break. The dollar index (which measures the greenback in relation to a basket of currencies) was unchanged at 98.81. The Japanese yen rose 0.2% to 156.75 dollars. Bitcoin fell by 0.78%, to $72,774.53, while ether dropped by 0.94%, to $2,130.43.
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Prices of oil rise as the Iran conflict intensifies
Oil prices rose Thursday as a result of a growing concern about the closure of the Strait of Hormuz. The U.S. Iran war is choking off vital Middle East oil &?gas supplies, while production facilities are limiting output. Brent crude was trading at $83.07 a barrel, up $1.67 or 2.05% by 0141 GMT. U.S. West Texas Intermediate Crude rose by $1.94 or 2.60% to $76.60. The U.S. - Iran war expanded on Wednesday, after a U.S. attack hit an Iranian warship near Sri Lanka. U.S. Senate Republicans also backed Donald Trump's campaign against Iran. They voted against the?bipartisan Resolution aimed at stopping the air war, and requiring Congress to authorize hostilities against Iran. Iraq, the second-largest crude oil producer in the Organization of the Petroleum Exporting Countries (OPEC), has reduced its output by almost 1.5 million barrels per day due to lack of storage and export routes, officials have said. Qatar, the largest liquefied gas producer in Gulf, declared force majeure for gas exports Wednesday. Sources say that a return to normal production levels may take at least one month. The Strait of Hormuz has been a major conduit for energy, accounting for almost a fifth of the global consumption. It is now on its fifth day of near-halting shipping due to the war against Iran and Tehran’s retaliation. The British maritime trade operations agency has reported that a large explosion was heard and witnessed by the captain of a tanker which was anchored 30 nautical miles south of Kuwait’s Mubarak al Kabeer. A small craft could be seen later leaving the area. J.P. Morgan stated in a client letter that Iran has not targeted the most critical energy infrastructure, but it is keeping the shipping risks extremely high. It estimates that approximately?329 oil ships are stuck in Gulf. The report added that "storage capacity in Gulf Cooperation Council nations and current energy prices are factors that limit the U.S.'s campaign." Referring to the political and economic alliance between Saudi Arabia, the United Arab Emirates and Qatar, Kuwait and Bahrain. J.P. Morgan stated that most oil?fields could be restarted within a few days. J.P. Morgan also said that full capacity is usually restored in two to three weeks. The primary constraint is not geology, but rather logistics. (Reporting and editing by Chris Reese, Clarence Fernandez, and Katya Glubkova from Tokyo)
Russell: The huge increase in the price of jet fuel is a sign that Iran's war will cause more pain.
The sudden increase in jet fuel costs in Asia is a warning sign that the economic impact of the Middle East war is soon to be felt by energy consumers.
Jet fuel prices in Asia's main trading hub, Singapore, rocketed by 72% on Wednesday to a record $225.44 per barrel, due to concerns about future supplies, given the disruption of approximately 20 million barrels of crude oil and refined products shipped through the Strait of Hormuz.
Jet kerosene - The spot price
The market is not convinced that the U.S. president Donald Trump's efforts to ensure that tankers can transit the narrow waterway, which carries around one-fifth the global oil consumption are worth it.
Jet fuel, which is stored in special tanks and has a low inventory level, is the part of crude oil that's most vulnerable to supply disruptions.
Due to the surging spot prices, the profit margins for producing a barrel jet kerosene using Dubai crude have jumped up to over $100 per barrel. This level suggests that market participants expect a severe supply in the coming weeks.
Jet fuel prices are likely to have risen far more than what would be justified by the worst-case scenario of a prolonged closure of the Strait of Hormuz.
It's important to note that Asian refiners are showing signs of increasing stress. Some plants have reported reducing their operating rates in order to conserve crude stocks, while other plants have brought forward maintenance.
Two sources familiar with this matter confirmed on Wednesday that India's Mangalore Refinery & Petrochemicals has suspended its fuel exports.
About 40% of the refined fuel produced by the state-run refiner in Karnataka's southern state is exported.
Other refineries are likely to follow MRPL, particularly those in India. India sources most of its crude oil from the Middle East, and will be battling to find alternatives suppliers on short notice.
China has asked companies to stop signing new contracts for the export of refined fuel and try to cancel any shipments that have already been committed. This was reported by several sources in industry and commerce on Thursday.
This would have a dramatic effect on regional markets if confirmed, as China has a large crude oil stockpile and spare refining capacities.
MEDIUM CRUDE SHORTAGE
The oil that doesn't make it through the Strait of Hormuz tends to be medium-sour, which is prized for the higher yield of middle distillates like jet kerosene or diesel.
These grades are lighter, and produce more distillates like gasoline and naphtha.
Even if refiners maintain their processing rates, it is possible that they will still be unable to meet the demand for middle distillates and end up producing too many light distillates.
On Wednesday, the profit margin in Singapore for producing a barrel of gasoil (the building block for jet fuel and diesel) jumped by 30.4% to $47.69.
The price of oil has doubled from February 27 when it closed at $21.90 per barrel. It is now at the highest levels since the Russian invasion of Ukraine in February 2022.
These margins will soon reach retail fuel costs in Asian countries that have?market pricing on products like gasoline and diesel.
Fuel prices rising sharply will cause inflation, affect consumer spending and halt some capital investments. Central banks may even consider raising interest rates.
The bigger problem is that, even if the conflict between Iran and the West is resolved in the next few weeks with the result of free movement of vessels through the Strait Of Hormuz the damage caused by the current disruption has now been locked into the supply chains.
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These are the views of the columnist, an author for.
(source: Reuters)