Prices doubled! Goldman Sachs: Fuel prices soar in some parts of Asia, refined oil surges more than crude oil

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The turmoil in the energy market caused by the Middle East war is impacting the refined oil market far more than crude oil itself.

According to the latest report from Goldman Sachs, since the outbreak of the conflict, the price increases of refined oil products such as diesel and jet fuel have significantly surpassed those of crude oil. Fuel prices in some Asian markets have doubled, and Korea, following Thailand, has announced restrictions on exports of refined oil to ensure domestic supply.

The core of this crisis lies in the structural importance of the Persian Gulf region to the global refining system—exports of medium and heavy crude oil from this region account for a critical proportion of global supply, and this type of crude is precisely the main raw material for producing diesel, jet fuel, and fuel oil.

The near-total interruption of exports through the Strait of Hormuz has not only cut off the circulation of crude oil but also directly hit the global supply chain for refined oil products that rely on Middle Eastern refineries.

According to a previous article by Wallstreetcn, Saudi Arabia has reduced crude oil output by about 2 million barrels per day, with the cuts mainly focused on heavy and medium-heavy crude oil. Currently, Saudi oil transport primarily depends on land pipelines rerouted to the Red Sea, but these pipelines are mainly used for light crude oil.

Refined oil prices rise far more than crude oil

According to statements by Goldman Sachs analysts Yulia Zhestkova Grigsby and Daan Struyven in their research report, this round of conflict in the Middle East is the most significant event impacting the oil market on record, with its effects particularly prominent in refined oil.

Since the US and Israel went to war with Iran, Brent crude oil prices have risen by more than 40%, surpassing the $100 per barrel mark. However, the increases for various refined oil products are much higher—with fuel costs in some Asian markets doubling compared to pre-war levels.

The two analysts note in their report that the serious disruption of medium and heavy crude supplies will lead to decreased production of diesel, jet fuel, and fuel oil. This type of crude is usually used to produce these high-demand oil products, but alternative supply sources outside the Middle East are extremely limited.

The supply structure of the Persian Gulf determines the depth of impact

Goldman's analysis reveals the structural roots of this crisis. The report points out that about 60% of crude oil typically exported from the Persian Gulf is medium and heavy crude, which is the main raw material for producing diesel, jet fuel, and fuel oil. Capacity for alternative supply outside the Middle East is quite limited.

The impacts from the conflict are multi-layered and cumulative:

Crude and refined oil exports from the Strait of Hormuz have nearly stopped completely;

Energy infrastructure in the region has come under attack;

Oil-producing countries have been forced to cut output, and some refineries have had to halt operations.

These factors together create systemic pressure on global refined oil supply.

Asia and Europe’s high import dependency makes them the first hit

Asian and European markets, which are geographically highly dependent on Persian Gulf supplies, are facing the most direct impact. Goldman Sachs data shows that about 50% of Asia’s naphtha imports come from the Persian Gulf, and about 40% of European jet fuel relies on supply from the region.

Naphtha is a byproduct of the refining process and is also a key raw material for petrochemical companies. Goldman Sachs warns that this crisis will affect naphtha supply, thereby threatening the stability of supply chains for relevant manufacturers. According to a previous Bloomberg report, naphtha shortages have already created supply chain risks for Japan.

Korea has followed Thailand in announcing restrictions on exports of refined oil. The consecutive implementation of these export controls indicates that supply shortages are continuing to spread across Asia, fundamentally impacting the regional flow pattern of refined oil.

Risk warnings and disclaimerThe market carries risks, and investments should be made with caution. This article does not constitute personal investment advice and does not take into account individual investors’ specific investment objectives, financial situation, or needs. Readers should consider whether any opinions, views, or conclusions in this article are suitable for their specific circumstances. All investment decisions based on this article are at your own risk. ```