Brent at $94 Leaves Asia's Distillate Markets Squeezed Despite Crude Import Recovery
Asia's crude imports are returning to pre-conflict levels but refined product flows remain constrained, keeping Pacific Rim fuel costs elevated.
ICE Brent crude front-month was priced at $93.60 a barrel as of 2026-08-22. Bloomberg Surveillance recently put the price at $94.17 and noted that "the distillate effect here is just immense" for Pacific Rim buyers. Brent has retreated sharply from wartime highs above $110 reached in May, but the fuel cost burden on import-dependent Asian economies has not eased at the same pace.7
The gap between crude recovery and product recovery sits at the centre of the problem. In 2025, Asia absorbed 87% of the crude and 86% of the LNG transiting the Strait of Hormuz, according to The Economist. Gulf producers supply between 40% and 80% of the seaborne crude imports of China, India, Japan and South Korea. When the Strait came under military pressure, refined fuel markets tightened before crude did. They have been slower to recover.2
Asia's crude import volumes are turning around. The region is on track to import roughly 22.18 million barrels per day in June 2026, approaching pre-conflict levels, The Star of Malaysia reported on 22 June (2026-06-22). But flows of refined products remain constrained, and fuel prices still reflect the supply stress, the report said. Crude can be rerouted around the Gulf; refineries cannot.6
The inventory drain explains why product markets stay tight. Global observable oil stocks have fallen a cumulative 246 million barrels since the conflict began — 129 million barrels drawn in March and another 117 million in April, a rate of about 3.9 million barrels per day, OGJ reported. That figure understates the tightness, because it excludes barrels stranded in Gulf storage or aboard tankers unable to transit Hormuz. Global refinery crude runs in 2026 are now expected to average around 82 million barrels per day, nearly 1.6 million barrels per day below 2025 levels.4
China has reinforced the product shortage rather than relieved it. Despite holding an estimated 1.3 billion barrels of crude reserves, enough to cover roughly a year of lost Gulf supply, Chinese authorities ordered major domestic refiners to suspend exports of diesel and petrol, The Economist reported. Kpler data show many of those refineries have also cut throughput by 10% or more, compressing volumes that might otherwise have given the region some relief.2
Brent's retreat from its May peak has come in lurches. On 20 May (2026-05-20), the July Brent contract was trading at $111 a barrel as markets processed mixed signals from Washington, Mint reported. By 25 May (2026-05-25), the contract had shed 5.5-7% to around $97.90 a barrel after US President Donald Trump described US-Iran negotiations as "largely negotiated" and potentially close to announcement, Cryptobriefing reported.1,3
The move did not hold. Oil spiked 5% on 8 June (2026-06-08) before dropping more than 3% the following day (2026-06-09), with NYMEX WTI front-month falling to $88.49 a barrel as markets adjusted to alternative supply channels, Invezz reported. Iran's foreign minister, Seyed Abbas Araghchi, offered a pointed response: "With lessons learned and knowledge we gained, return to war will feature many more surprises."5,1
The Gulf disruption has spread into European gas markets. European natural gas prices are 92% above pre-conflict levels, The Economist noted, with Gulf LNG flows that Asian buyers normally absorb now curtailed. ICE Endex TTF front-month was at €65.83 per megawatt-hour as of 21 August (2026-08-21). JKM, the Asian LNG spot benchmark, was at $22.94 per million BTU as of 2026-08-22.2
NYMEX heating oil front-month was at $4.49 a gallon as of 2026-08-22. Any easing of Pacific Rim fuel costs hinges on whether Chinese refiners restore run rates and resume diesel and petrol exports, a move Beijing has so far blocked. Iran's foreign minister's warning about escalation adds further uncertainty to that timeline. Brent has come down from the highs of May, but on the distillate side, the product market is not tracking crude on the way down.4,25