Global Energy Impact: Iran War Drives Refined Product Surge

Global Oil Disruption: Jet Fuel and Diesel Prices Surge Faster Than Crude Amid Middle East Conflict​

Refined Products Face Greater Impact Than Crude Oil​

New Delhi, March 17: The ongoing conflict involving Iran across the Middle East is reshaping global energy markets, with refined petroleum products such as jet fuel and diesel witnessing sharper price increases than crude oil, according to a report by Goldman Sachs Group.

The report highlighted that while crude oil prices have risen significantly, the rally in refined products has been even more pronounced. Analysts Yulia Zhestkova Grigsby and Daan Struyven noted that supply disruptions, particularly of medium-heavy crude, are constraining the production of key fuels including diesel, jet fuel, and fuel oil.

Supply Chain Disruptions Intensify Across Key Routes​

The conflict, which began on February 28 and has now entered its third week, has severely disrupted oil and fuel supply chains. Exports through the Strait of Hormuz have come to a halt, while multiple energy infrastructure assets across the region have faced attacks.

These developments have forced crude producers to reduce output and suspend certain refinery operations, tightening global supply conditions.

Sharp Price Surge in Fuel Markets​

Crude oil prices have surged more than 40 per cent since the onset of hostilities, with Brent crude crossing the $100 per barrel mark. However, the impact on refined fuels has been even more severe.

In several Asian markets, prices of jet fuel and diesel have surged sharply, with costs doubling in some regions. Countries including China, Thailand, and South Korea have imposed export restrictions to safeguard domestic supply, further tightening global availability.

Medium-Heavy Crude Shortage Adds Pressure​

The report underscored that nearly 60 per cent of crude exports from the Persian Gulf consist of medium and heavy grades. These are essential for producing fuels such as diesel, jet fuel, and fuel oil.

With limited alternative suppliers outside the Middle East, disruptions to these specific crude grades are amplifying the strain on global refining capacity and fuel production.

Broader Impact Extends to Petrochemicals​

Beyond transportation fuels, the disruption is also affecting naphtha, a key refining byproduct used in petrochemical manufacturing. The report noted that Asia depends on the Persian Gulf for nearly 50 per cent of its naphtha imports, while Europe sources around 40 per cent of its jet fuel requirements from the region.

As supply constraints persist, the ripple effects are expected to be felt across multiple sectors reliant on these critical energy inputs.