Middle East crude oil exports rebound, soaring freight rates leave Asian refiners struggling to maintain profit margins.

October 19 - Middle East crude oil exports continue to recover, but soaring transportation and insurance costs are significantly squeezing the profits of Asian refiners. HiLo Analytics data shows that Asian refiners have an average gross margin of about $40 per barrel, and after deducting approximately $33 in freight costs, net profit is only about $7, with freight consuming about 82% of the gross margin; in contrast, this proportion for refiners along the U.S. Gulf Coast and Northwest Europe is only about 16%.

On the supply side, Kpler data shows that Middle East crude oil exports rebounded to 15.4 million barrels per day in September, about 90% of pre-war levels; Asia's 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 oil tankers in the Strait of Hormuz continue to push up freight and insurance costs, with transportation costs on some routes reaching several times pre-war levels.

To attract Asian buyers, Middle Eastern oil-producing countries have been forced to significantly cut crude oil selling prices, with some discounts as high as $30 per barrel, but trading price for volume is still difficult to offset the pressure of logistics costs. If refiners further cut operating rates or turn to other crude oil sources, the recovery of Middle East exports may be hindered again.