East Asian Refiners Eye Fuel Sales Boost Before Hormuz Reopen

4f5hpplu52eqdyw]mm6ies]q_media_dl_1.png Kpler

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(Bloomberg) — Refineries in East Asia are starting to ramp up fuel exports after months of holding back and prioritizing local sales, in what appears to be an attempt to front-run the market before the Strait of Hormuz reopens.

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There has been an uptick in spot offers of distillate cargoes — which includes diesel and jet fuel — from at least two processors in the recent week, traders said, with South Korean refiners among them. The increase is an extension of a trend seen over the past month, as high stockpiles in some Asian nations prompt a rise in sales. 

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Traders said this may be a move by Asian suppliers to sell more ahead of an impending wave of cargoes to be unleashed from inside the Gulf.

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The offers, made through private negotiations and tenders, are set to weigh on Asian prices and bring them down from recent highs, even as they remain above pre-war levels, the traders said, asking not to be identified as they’re not authorized to speak publicly.

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Since the Iran war first broke out in late-February, Asia’s top exporters including China, Japan and South Korea crimped sales for energy security reasons. For now, with Chinese export curbs still in place, traders said other east Asian refiners may capitalize on this window before the floodgates open. Lately, China — the world’s largest oil refiner — has only permitted limited sales on a bilateral basis.

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Asian supplies of gasoil, also known as diesel, began trading at discounts as of earlier this week, falling from a premium, signaling a weakening of the market. 

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Mega-refineries in the Persian Gulf are major fuel exporters. The US-Iran war exposed 10% of the global diesel trade and 20% of jet fuel to disruption, Kpler said before the conflict. 

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