Price Doubles! Goldman Sachs: Fuel Prices Surge in Parts of Asia, Refined Oil Spikes More Dramatically Than Crude Oil

The energy market turmoil triggered by the Middle East conflict is impacting the refined oil product market far beyond the effects on crude oil itself.

According to the latest report from Goldman Sachs, since the outbreak of the conflict, prices for refined oil products such as diesel and jet fuel have surged well beyond crude oil. Fuel prices in some Asian markets have doubled, with South Korea, after Thailand, announcing restrictions on refined oil exports to ensure domestic supply.

The core of this crisis lies in the structural importance of the Persian Gulf region to the global refining system—this region’s exports of medium and heavy crude oil account for a key portion of global supply, and these types of crude are the main raw materials for producing diesel, jet fuel, and fuel oil.

The near-complete disruption of the Strait of Hormuz export route not only cuts off crude oil flows but also directly impacts the global refined oil supply chain that depends on Middle Eastern refineries.

As previously reported by Wallstreetcn, Saudi Arabia has cut crude oil production by about 2 million barrels per day, mainly reducing heavy and medium-heavy crude. Currently, Saudi oil transportation relies on land pipelines passing through the Red Sea, but these pipelines primarily transport light crude.

Refined oil prices have surged far more than crude oil.

According to Goldman analysts Yulia Zhestkova Grigsby and Daan Struyven in their research report, this Middle Eastern conflict is the most impactful shock to the oil market on record, with particularly significant effects on refined products.

Since the US and Israel began their conflict with Iran, Brent crude has risen over 40%, surpassing $100 per barrel. However, the increase in various refined oil products has been even more pronounced—fuel costs in some Asian markets have doubled compared to pre-war levels.

The analysts pointed out that severe disruptions in the supply of medium and heavy crude will lead to declines in the production of diesel, jet fuel, and fuel oil. These types of crude are typically used to produce the high-demand oil products mentioned, but alternative sources outside the Middle East are extremely limited.

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

Goldman’s analysis reveals the structural root of this crisis. The report states that about 60% of the crude oil exported from the Persian Gulf is medium and heavy crude, which are the main raw materials for producing diesel, jet fuel, and fuel oil, and there is very limited capacity outside the Middle East to provide alternative supplies.

The impact of this conflict is multi-layered:

The near-total halt of crude oil and refined product exports through the Strait of Hormuz;

Attacks on regional energy infrastructure;

Oil-producing countries forced to cut output, with some refineries forced to halt operations.

These factors collectively create systemic pressure on global refined oil supplies.

High dependency on imports in Asia and Europe makes them most vulnerable.

Asia and Europe, which are highly dependent on Persian Gulf supplies, are facing the most direct impact. Goldman data shows that about 50% of naphtha imports in Asia come from the Persian Gulf, and approximately 40% of jet fuel in Europe depends on supplies from the region.

Naphtha is a byproduct of refining and also a key raw material for chemical manufacturing. Goldman warns that this crisis will affect naphtha supplies, threatening the stability of related manufacturing supply chains. According to previous reports by Bloomberg, naphtha shortages have already posed risks of disruption to Japan’s supply chain.

South Korea has followed Thailand’s lead, announcing restrictions on refined oil exports. The successive implementation of these export controls indicates that refined oil supply shortages are continuing to spread across Asia, significantly affecting regional refined oil distribution patterns.

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