5.1 Crude/Brent
The global crude market is currently navigating a period of extraordinary volatility and geopolitical upheaval, primarily driven by the escalating conflict between the United States and Iran. Saxo reports that President Trump has issued a 48-hour ultimatum to Tehran to reopen the Strait of Hormuz or face targeted strikes on Iranian power plants and energy infrastructure. This threat has pushed the market into a state of high alert, with Brent prices experiencing intraday swings of nearly $20/bbl. The Strait of Hormuz is a critical chokepoint for roughly 20% of global oil consumption, and its potential closure represents a severe supply shock that has overshadowed traditional fundamental drivers.
Onyx noted that while the market initially spiked on war fears, a subsequent social media post by the US President regarding potential negotiations led to a sharp, albeit temporary, collapse in flat prices before they rebounded. PVM describes these developments as "unprecedented," with even seasoned traders struggling to manage the wild fluctuations in the WTI/Brent arbitrage and prompt spreads.
Vortexa and Kpler data indicate that tanker movements are being heavily influenced by these tensions, with some vessels broadcasting messages of neutrality to avoid being targeted while navigating the region. Meanwhile, Sinopec has signaled a cautious approach, advocating for access to state reserves rather than increasing purchases of Iranian crude under current sanctions. The physical market is showing signs of extreme stress, as the cost of shipping and insurance premiums for Middle Eastern grades skyrocket. Despite the focus on the Middle East, US production remains a key secondary theme, though the immediate risk to the global supply chain via the Persian Gulf remains the dominant price setter.
Analysts at JPM and Goldman Sachs suggest that a sustained closure of the Strait could push prices well above the $125/bbl mark, although any signs of successful back-channel diplomacy could lead to a rapid mean-reversion as war premiums are priced out. Market sentiment is currently characterized by a "risk-off" bias in broader equities, but a "fear-driven" bid in the energy complex. Onyx highlights that positioning among discretionary funds and CTAs is becoming increasingly reactive to headline news rather than technical indicators, leading to a breakdown in traditional price support and resistance levels. The forward curve is in deep backwardation, reflecting the urgent need for prompt barrels in the face of potential disruption.
5.3 Naphtha
The Naphtha market is currently experiencing a historic rally, with Onyx reporting that NWE cracks briefly flipped positive and are eyeing all-time highs. This strength is directly tied to the supply shock emanating from the Middle East, as the Strait of Hormuz closure disrupts the flow of light ends to the Asian market. RIM and Platts note that the MOPJ crack reached unprecedented levels, surpassing $10/bbl, as petrochemical producers in North Asia scramble for alternative feedstocks. The dependency of Asian crackers on Middle Eastern naphtha—which accounts for over 50% of imports—has made the region particularly vulnerable to these geopolitical tensions.
Platts highlights that the disruption of feedstock flows has coincided with refinery run cuts in China and Japan, further tightening domestic supply. The Apr’26 NWE crack rallied from -$5/bbl to over $1/bbl, a move driven by aggressive buying from majors and physical players. Onyx reports a significant long bias in the MOPJ flat price, while the Apr/May’26 spread has seen mixed interest from trade houses and refiners. The Naphtha East/West differential reached a plateau around $80-90/mt before retreating slightly, reflecting the extreme premium of Asian prices over European benchmarks.
EA indicates that the loss of Middle Eastern supply is forcing buyers to look toward the US and West Africa, but the long voyage times and high clean freight rates are limiting the effectiveness of these arbitrage flows. Furthermore, the relationship between naphtha and gasoline remains tight; as naphtha is a key feedstock for gasoline blending via catalytic reforming, the surge in naphtha prices is putting upward pressure on global gasoline components. Petrochemical margins are being crushed by these high feedstock costs, leading to talk of widespread cracker rate reductions across South Korea and Taiwan. Vortexa reports a buildup of naphtha cargoes in the Mediterranean as traders wait for a clear arbitrage window to the East to open, though insurance risks remain a deterrent.
5.5 LPG/NGLs
The LPG and NGL complex is under severe pressure due to the same geopolitical factors affecting the wider oil market. Platts and RIM report that Asian imports of LPG, which rely on the Middle East for approximately 55% of their supply, are facing imminent shortages. Two tankers carrying LPG from the UAE and Kuwait were recently reported to have successfully navigated the Strait of Hormuz by broadcasting neutral status, but these are isolated successes in an otherwise paralyzed shipping corridor. Onyx highlights that the FEI (Far East Index) has seen a significant bid, tracking the strength in naphtha, as both products compete for space in the light ends pool. However, the Propane/Naphtha spread remains a key metric for cracker feedstock switching. While propane is usually the preferred alternative when it trades at a discount to naphtha, the current disruption in LPG supply from the Arab Gulf is making this switch difficult for North Asian operators.
Bloomberg reports that US LPG exports are seeing increased demand from both Europe and Asia, but the Panama Canal and global shipping constraints are limiting the volume that can be redirected. Saudi CP (Contract Price) expectations for the coming month have been revised upward sharply to reflect the supply risk and the spike in crude.
In the US, Ethane and Propane prices at Mont Belvieu have also ticked higher, supported by the broader energy rally and the potential for increased export demand. Saxo notes that while gasoline sales fell slightly in Canada, the demand for heating and industrial LPG remains robust, providing a floor for prices. The market is also watching the inventory levels at major hubs like Mt. Belvieu and the ARA region, which are expected to draw down rapidly if Middle Eastern flows remain restricted. The supply of Butane for gasoline blending is also becoming a concern, as refiners look to maximize octane components in a high-price environment.
5.7 Gasoline/Mogas
The Gasoline market is caught between surging feedstock costs and a broader macro slowdown that is threatening demand. Platts and RIM report that Mogas 92 and 95RON cracks in Asia are being squeezed by the record-high prices of naphtha, a primary blendstock. Saxo notes that while geopolitical tensions have spiked prices, actual retail demand in some regions, such as Canada, has shown signs of softening, with gasoline sales falling 0.4% in February. However, the "driving season" in the Northern Hemisphere is approaching, which typically provides a seasonal tailwind for prices.
Onyx reports that the EBOB market in Europe is seeing support from the disruption of refinery runs in the Middle East, which often supplies the Atlantic Basin with finished components. In the US, RBOB futures have been extremely volatile, tracking the massive swings in WTI. Platts indicates that the closure of the Strait of Hormuz has restricted the flow of gasoline components from the Arab Gulf to East Africa and South Asia, forcing those regions to seek supplies from Singapore and Europe. This shift in trade flows is supporting Asian gasoline cracks despite the high cost of crude.
Nomura and Macquarie analysts warn that if crude prices stay above $100/bbl for an extended period, demand destruction could become a major theme, particularly in price-sensitive emerging markets. The technical side of the market shows that RBOB is testing major resistance levels, with high open interest in call options at the $3.50/gal level. Vortexa data shows a decline in gasoline floating storage as the market draws down stocks to compensate for the lack of fresh imports from the Middle East. Refiners are attempting to maximize gasoline yields to capture what remains of the refining margin, but the high cost of high-octane components like reformate and alkylate—driven by the naphtha rally—is making blending difficult and expensive.
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