Strait of Hormuz disruptions and refinery outages deepen global energy crisis
The ongoing conflict involving Iran is expected to hit refined fuels like jet fuel and diesel harder than crude oil, according to Goldman Sachs.
Analysts said prices of refined products have risen significantly more than crude, driven by supply disruptions of medium-heavy crude — a key input for producing diesel, jet fuel, and fuel oil.
Strait of Hormuz disruption adds pressure
The war in the Middle East, involving the United States and Israel, has severely impacted global energy markets. Exports through the Strait of Hormuz have nearly halted, while attacks on energy infrastructure have forced producers to cut output and shut refineries.
Crude prices have surged over 40%, with Brent crossing $100 per barrel. However, refined fuel prices in parts of Asia have surged even higher, in some cases doubling.
Global ripple effects
Countries like South Korea, China, and Thailand have imposed export restrictions to protect domestic markets.
Goldman Sachs noted that nearly 60% of crude exports from the Persian Gulf are medium and heavy grades, which are essential for producing diesel and jet fuel, and have limited alternatives globally.
Impact on Europe and Asia
The disruption is also expected to hit petrochemical supply chains. Asia relies on the region for nearly half of its naphtha imports, while Europe depends on it for about 40% of its jet fuel supply.
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