Middle East Crude Oil Exports Rebound, Asian Refiners' Profits Squeezed

On October 19, crude oil exports from the Middle East continued to recover, but soaring transportation and insurance costs severely impacted the profits of Asian refiners. According to HiLo Analytics, Asian refiners' average gross profit is about $40 per barrel, and after deducting approximately $33 in shipping costs, the net profit is only about $7, with shipping costs accounting for about 82% of the gross profit; in contrast, this ratio for refiners along the U.S. Gulf Coast and in Northwest Europe is only about 16%.

In terms of supply, Kpler data shows that crude oil exports from the Middle East rose to 15.4 million barrels per day in September, approaching 90% of pre-war levels. Asian crude oil imports in October are expected to reach 23.5 million barrels per day, the highest level since February this year. However, Iran's attacks on tankers in the Strait of Hormuz continue to drive up shipping and insurance costs, with some shipping routes seeing costs reach several times pre-war levels.

To attract Asian buyers, Middle Eastern oil-producing countries have been forced to significantly lower crude oil prices, with some discounts reaching as high as $30 per barrel, but the price cuts have still struggled to offset logistics cost pressures. If refiners further reduce their operating rates or turn to other sources of crude oil, the recovery of Middle Eastern exports may be hindered again.

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