Fuel supply tightens in Asia, 5 oil tankers bound for Europe turn eastward

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The Middle East conflict disrupts energy supply, prompting Asian energy buyers to urgently secure their supplies, bidding against each other in an attempt to purchase fuels originally destined for other regions.

According to ship tracking data compiled by Bloomberg, five tankers loaded with diesel and jet fuel have recently changed course mid-journey, turning from their original westbound routes to East Asia. Three of these vessels are from India, and the other two had already left the Persian Gulf before the actual closure of the Strait of Hormuz last week.

The supply crisis triggered by the Middle East conflict is causing a structural shock to the global energy market. As the world's largest energy importing region, Asia is facing a double blow from the Middle East war and supply disruption in the Persian Gulf. China has already requested its refineries to reduce exports, while in Africa, long queues at gas stations are appearing in several countries.

The supply gap is quickly affecting production. Recently, due to crude oil shortages, many Asian refineries have had to lower their operating rates, pushing regional refined oil prices higher. Meanwhile, some advanced refineries in the Middle East are also cutting output as their inventories run out.

In addition, some Asian refineries had scheduled maintenance before the conflict, and procurement typically secures supplies based on maintenance cycles in advance, making it difficult to flexibly ramp up production in the short term, further exacerbating supply tightness.

Multiple governments are intensively introducing emergency policies, from releasing strategic reserves to limiting oil price increases, seeking to stabilize their domestic energy markets.

Tax cuts, price limits, sales restrictions, reserve releases, countries urgently rescue themselves

The Middle East conflict has caused tight energy supply in Asia, prompting multiple countries to urgently introduce response policies. Vietnam announced last Friday the cancellation of fuel import tariffs and granted greater procurement flexibility to PetroVietnam to attract supplies, but retail prices have soared to their highest since 2019, and dozens of gas stations in Hanoi have been forced to close or shorten business hours.

South Korea launched its first oil price controls in nearly 30 years; President Lee Jae-myung announced maximum price limits for petroleum products and plans to expand the scope of fuel tax cuts; Bangladesh directly reduced demand, closing universities early and restricting fuel sales.

On the supply side, Japan has instructed its national oil reserve bases to prepare for a release, the clearest signal yet of tapping reserves. Japan currently holds about 260 million barrels of strategic reserves, equivalent to 204 days of imports. The market is watching whether Japan will act alone bypassing the International Energy Agency.

The scale of the Persian Gulf shock far exceeds Russia-Ukraine; Asia suffers the most pressure

This shock is far greater than before. According to market analysis, the loss in Persian Gulf exports is estimated at nearly 17 million barrels per day, about 17 times the peak supply loss from Russia during the 2022 Russia-Ukraine conflict, and oil price volatility has surged to extreme levels over 100.

Goldman Sachs analysis shows that Asia, as the world's largest oil import region, is bearing an unbalanced pressure. With oil prices at $85 a barrel, GDP growth pressure has already reached 1.6 percentage points, and Brent crude currently exceeds $100 per barrel, so the actual impact may be even deeper.

Against this backdrop, Asian economies are using different tools to face the same pressure. But if high oil prices persist, whether governments can continue to cover the subsidy gap created by price controls will be a core risk variable closely watched by investors.

Risk warning and disclaimerThe market carries risk, and investment should be cautious. This article does not constitute personal investment advice, nor does it consider the unique investment goals, financial circumstances, or needs of individual users. Users should consider whether any opinions, views, or conclusions herein fit their specific circumstances. Investment based on this is at your own risk. ```