Authored by Tsvetana Paraskova via OilPrice,

• Asia’s crude imports have nearly recovered to pre-war levels, reaching 26.39 million bpd in October, while refined fuel imports remain 10% below pre-war volumes.
• Diesel shortages persist despite recovering crude flows, as damaged Middle Eastern refineries, Russian supply disruptions and reduced fuel shipments keep refining margins elevated.
• The global diesel crunch could extend well into 2027, with deferred refinery maintenance and uncertain Chinese exports threatening to prolong supply shortages.

While crude oil imports in Asia have reached pre-war levels, imports of refined products remain weak as gasoline and diesel imports from the Middle East have crashed amid reduced refining capacity.

Asia's oil import story these days is a reflection of the global oil markets - crude oil availability has significantly increased since the early summer lows and flows out of the Middle East have largely recovered, but supply of gasoline, and especially diesel, has sharply dropped since the Iran war began at the end of February.

Reduced refinery runs in the Middle East, with some refineries still out following Iranian strikes in the early days of the war, have combined with lower refined product flows through the Strait of Hormuz, due to the much more dangerous ship-to-ship transfers of highly inflammable fuels, to slash supply to the market.

Russia's fuel crunch due to Ukrainian strikes on refineries and the lack of Russian diesel exports have compounded the global diesel problem, sending refining margins and retail prices to record highs in the third quarter of the year.

The crunch is extending into the fourth quarter, and could last well into 2027, analysts say, as many refineries will have to undergo in the spring long overdue maintenance that has been deferred from this year to maximize production.

In this context, crude and product imports in Asia, the world's biggest oil-importing region, are telling of the state of the global oil market.

A Tale of Two Markets

Asia's crude oil imports jumped to 26.39 million barrels per day (bpd) in October, up from 24.24 million bpd the month prior, per data by Kpler cited by Reuters' Asia Commodities and Energy Columnist Clyde Russell.

The import levels are estimated at nearly par with the three-month average of 27 million bpd before the Iran war, and up by 39% compared to the lowest level during the conflict so far of 19 million bpd in April, according to the data.

Asia's crude imports that have moved through the Strait of Hormuz soared to 7.4 million bpd in October, compared to just 1.6 million bpd in April. Flows through Hormuz en route to Asia are still lagging the pre-war levels of about 13 million bpd, but supply has jumped from Saudi Arabia's Red Sea port of Yanbu. In recent months, Asian refiners have also materially raised crude oil imports from Russia and the Americas to offset the supply lost at the Strait of Hormuz.

In contrast, Asia's light and middle distillate imports, estimated at about 6.15 million bpd in October by Kpler, were still 10% below pre-war levels. Imports from the Middle East alone remain 18.4% below pre-war volumes, although Asia's total fuel imports rose from September on the back of increased supply from the Americas and Africa.

Diesel Crunch

Gasoline and especially diesel supply remains more restricted than crude oil flows. Since the summer, diesel has been the most distressed barrel in the oil market and soaring refining margins and wholesale and retail prices globally are reflecting this constraint.

Despite the recovered crude flows, refineries outside the Middle East and Russia cannot offset the lost capacity, at a time when diesel and other middle distillate demand is rising going into the northern hemisphere winter.

China's near-term export policies will be key for Asia's regional supply in the fourth quarter, analysts say.

"China remains the main Asian uncertainty. October's clean-product export plan was around 500 kt below September's, while November diesel and jet export volumes remain unclear," Abhishek Kumar, senior oil market analyst at Sparta Commodities, said last week.

"Additional Chinese cargoes could loosen Asian balances, but the market needs greater clarity on approvals and actual loadings."

For global supply, the crunch is likely to extend until the middle of 2027, investment banks and the International Energy Agency (IEA) have warned.

Global seaborne gasoil and diesel exports have contracted sharply since the Middle East crisis began, the IEA said in its latest Oil Market Report for October.

Reduced refinery output lowered exports to an average 4.7 million barrels per day over the first nine months of 2026, which was 10% below the same period last year, or a drop of 700,000 bpd, the agency noted.

Even if refinery output rose early next year, the diesel and gasoil market balance "will remain tight well into 2027 and is dependent on a recovery of product supply from the Middle East," the IEA said.

"Failing this, further demand reductions and the heavy economic costs these will entail may be needed to balance markets."

Global fuel markets are set to remain tight until at least the middle of next year as the second quarter of 2027 will see unusually high planned maintenance that refiners have deferred from this year, Morgan Stanley said last month.

The expected drop in refinery utilization in the second quarter of next year would be two and a half times the usual capacity taken offline by spring maintenance globally, and is more than the capacity in the Middle East and Russia that's currently offline, according to Morgan Stanley's analysts.