5.1 Crude/Brent
The global crude market is currently navigating a period of extreme volatility as geopolitical tensions in the Middle East escalate, significantly impacting supply security and price trajectories. [Bloomberg] reports that oil prices initially fell after Iraq signed a deal with the Kurdistan Regional Government to resume exports via Turkey, a move designed to bypass the Strait of Hormuz. This rerouting is intended to provide a critical alternative as the U.S. intensifies efforts to force the reopening of the key waterway, which remains a primary chokepoint. However, the relief was short-lived as [Argus] reported a missile attack on Qatar's Ras Laffan industrial complex, which caused extensive damage and fueled fears of broader retaliation from Iran against regional energy assets.
[Saxo] notes that while futures prices might mask some of the deeper stress, the physical market is reacting sharply to the potential for further disruptions at South Pars and other major facilities.
[Bloomberg] highlights that the death of Ali Larijani, a key Iranian leader, has added another layer of desperation to Tehran’s strategy, potentially leading to more aggressive attempts to disrupt global oil flows. [Argus] also points out that the U.S. has started offering long-term crude loans from the Strategic Petroleum Reserve (SPR) to mitigate these disruptions, with the first deliveries expected by the end of this week. Despite these efforts, [JPM] observes that the market remains on edge, with buyers in Asia—particularly Thailand, Vietnam, and Taiwan—looking for non-Middle Eastern alternatives like U.S. crude to diversify their supply chains.
[Goldman Sachs] suggests that the risk to energy infrastructure is rising, and the low flow through Hormuz continues to support a higher floor for prices. [PVM] analysis indicates that the forward curve is reflecting a significant risk premium as the de facto closure of the Strait persists.
[Argus] reports that U.S. benchmark WTI settled near $98/bl amid these threats, while North Sea Dated climbed to levels not seen since mid-2022. The market sentiment is further weighed down by [Bloomberg] reports that Saudi Arabia has only managed to revive half of its exports via the Hormuz bypass, indicating that the global supply cushion is thinner than many had hoped.
[Saxo] warns that any hits on major refinery plants or additional mining of the Strait could send prices into a new, significantly higher range. [Argus] adds that the de-escalation optimism that briefly appeared has been eclipsed by the reality of military strikes and threats to downstream facilities in Saudi Arabia and the UAE. [Bloomberg] emphasizes that the surge in prices is becoming a central concern for global central bankers as they assess the impact on inflation and monetary policy.
5.3 Naphtha
The naphtha market is experiencing a significant shift in dynamics, primarily driven by supply security concerns in Northeast Asia and volatile feedstock costs.
[Argus] reports that South Korea has flagged naphtha as a "security item," intensifying monitoring and potentially adjusting stockpile mandates to ensure consistent supply to its petrochemical sector. This move comes as Middle Eastern flows are disrupted, forcing regional crackers to look for alternative Western barrels.
[Platts] indicates that the naphtha-to-petrochemicals path is under pressure as prices at the Japanese and Singapore hubs spike. The steam cracking process, which typically prefers lighter naphtha to produce high yields of ethylene and propylene, is becoming increasingly expensive.
[RIM] notes that transactions in the Asian window have been characterized by firming premiums, even as some refiners in Japan cut run rates due to the broader energy shock.
[Onyx] highlights that European naphtha cracks have rallied from -$3/bbl to -$2/bbl as trade houses bid aggressively on geopolitical news. The West-to-East (W/E) arbitrage has also seen a jump, with April E/W spreads rising from $72/mt to $80/mt, reflecting the urgent need for supplies in the Asian market. [Platts] reports that while high prices are incentivizing some flows, the elevated clean freight rates are eating into arbitrage margins.
Furthermore, the relationship between naphtha and LPG is being closely watched; with propane prices also surging, the typical feedstock switch at crackers is becoming less about cost-saving and more about absolute availability.
[Argus] points out that Japan’s retail price crunch is trickling down into the industrial naphtha sector, with government subsidies being set to cap the impact of rising import costs. [Saxo] analysis suggests that the current naphtha strength is largely sentiment-driven but is backed by the physical reality of chokepoints in the Middle East.
[GS] warns that if the Iran conflict persists, the petrochemical chain in China and South Korea could face prolonged feedstock shortages, potentially leading to lower operating rates at downstream polymer plants. [Onyx] data shows that deferred cracks for NWE are being bid by trade houses, indicating a belief that supply tightness will persist through Q3 2026.
The market is also monitoring the flow of pyrolysis gasoline (pygas), a by-product of steam cracking, as a measure of regional industrial activity. Overall, the naphtha complex remains highly sensitive to any further escalation that could impact the major export terminals in the Arab Gulf.
5.5 LPG/NGLs
The LPG and NGL markets are currently under extreme pressure as global supply chains are rerouted and domestic inventories face seasonal and geopolitical shifts. [Argus] reports that U.S. propane stocks rose by 810,000 barrels according to the latest EIA data, which provided a slight bearish counter-narrative to the otherwise soaring global prices. However, the international market is dominated by the fallout from the Middle East conflict.
[RIM] indicates that the Middle East LPG market is facing severe tightness as the Strait of Hormuz closure prevents typical VLGC (Very Large Gas Carrier) loadings. The freight market for VLGCs has seen a spike in rates, with [RIM] reporting that single-port loading and discharging costs are reaching multi-year highs due to elevated insurance and war-risk premiums.
[Platts] notes that the price of Propane (FEI) has continued to strengthen, hitting levels near $910/mt as Asian demand remains robust despite the high costs. The Propane Dehydrogenation (PDH) sector in China is particularly vulnerable, as the conversion of propane to propylene becomes increasingly expensive, squeezing margins for downstream polypropylene producers. [Argus] reports that despite the high prices, some buyers in Japan and South Korea are still seeking refrigerated cargoes to ensure heating and industrial supply security.
[Onyx] highlights that the LST/FEI spread has "tanked," with the arb closing significantly lower as the U.S. market (LST) lags behind the surging Asian (FEI) prices. This has led to increased buying interest in deferred FEI/MOPJ spreads by Chinese majors, who are hedging against long-term supply uncertainty. [Bloomberg] adds that the broader energy shock is causing a "retail price crunch" in many regions, with LPG being a critical component of household energy costs in parts of Asia.
[RIM] also points out that the US/NWE market is seeing firming spreads, with April/May NWE LPG spreads trading significantly stronger than previous sessions. The relationship between butane and naphtha for gasoline blending is also being monitored, as the seasonal shift in gasoline specifications (RVP) typically reduces butane blending demand, but the current shortage of other components may change this dynamic.
[Saxo] analysis suggests that the LPG market is currently "disconnected" from traditional fundamentals, being almost entirely driven by the logistical impossibility of navigating the Arab Gulf. [GS] warns that the high cost of NGLs could eventually lead to demand destruction in the industrial sector if prices remain above $1,000/mt for extended periods. Overall, the LPG market remains a critical focus for risk managers as the chokepoint risks remain unresolved.
5.7 Gasoline/Mogas
The global gasoline market is currently defined by surging retail prices, significant refinery disruptions, and shifting trade flows. [Argus] reports that Japan’s retail gasoline prices have reached record highs of ¥190.80/litre, prompting the Tokyo government to start providing subsidies to cap prices at ¥170/litre. This comes as Japanese refiners, including Idemitsu, cut run rates and limit deliveries to maintain stable supplies amidst the Middle East war.
In the U.S., [Argus] reports that New York Harbor (NYH) gasoline and diesel prices rose again following renewed fighting in the Middle East. Despite a build in total U.S. gasoline stocks, the localized supply tightness in the Northeast is driving prices higher. [Bloomberg] notes that U.S. diesel costs have topped $5 a gallon, raising concerns about broader inflationary pressure.
[Onyx] reports that the Singapore window has seen additional fuel demand from Cambodia, which is importing more from Singapore and Malaysia to compensate for shortages from Vietnam and China. [Argus] confirms that Vietnam and China have restricted fuel exports until the end of March to prevent domestic shortages, a move that is significantly tightening the Asian Mogas market. [Platts] observes that Asian gasoline cracks are at a rare discount to Dubai crude in some sessions, reflecting the volatile relationship between the barrel and refined products.
[Sparta] analysis suggests that while pricing remains strong, actual physical flows are weakening as buyers become more cautious.
[Onyx] highlights that the 60-day waiver of the Jones Act by the Trump administration will allow foreign-flagged vessels to transport gasoline between U.S. ports, potentially easing some of the supply disruptions on the East Coast. [RIM] indicates that gasoline transactions in the Asian market are characterized by firming spreads, with April/May 92RON spreads rising back to $10.90/mt.
[Bloomberg] reports that Brazil's distributors are seeing signs of a gasoline shortage as the global supply chain remains fractured. The market is also watching the impact of "drag-reducing agents" (DRAs) being used by Saudi Arabia to accelerate oil flows to its Red Sea ports, which could eventually support higher refinery runs once those barrels reach their destinations. [Saxo] notes that gasoline prices are trailing the crude surge but remain extremely sensitive to any further threats to Middle Eastern downstream facilities like Samref or Sadara.
[GS] warns that a prolonged war could lead to a significant "driving season" supply crunch if refineries cannot secure consistent crude feedstock. Overall, the gasoline complex is caught between soaring input costs and government attempts to shield consumers from record-high prices at the pump.
5.8 Petrochemicals
The petrochemical market is currently navigating a period of intense supply tightness and surging feedstock costs, with major players across Asia and the U.S. adjusting to the Middle East energy shock.
[Platts] reports that prices for Polypropylene (PP) and Polyethylene (PE) in South Asia continue to rise as supply remains constrained and feedstock costs soar. The situation is particularly acute for the Benzene chain, with [Platts] noting that Asian Benzene prices have actually fallen slightly as they track the decline in the broader aromatics complex, though U.S. Gulf Benzene prices surged on Middle East war news. [RIM] transactions show that Ethylene, Propylene, and Butadiene—the core olefins—are seeing firming prices due to cracker outages and reduced refinery run rates in Japan.
[Onyx] highlights that Chinese buyers are actively hedging in the paper market to secure future supply of olefins and aromatics.
[Platts] reports that Asian PVC prices have surged on tight supply and rising feedstock costs, especially from the Ethylene to EDC to VCM path. The "Para-xylene (PX) to PTA" link is also under pressure; while Asian PX prices fell recently, tracking weaker futures, they remain at historically high levels compared to early 2022.
Overall, the petrochemical sector is facing a "perfect storm" of high input costs and logistical barriers, leading to widespread price hikes for finished polymers and chemical intermediates.
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