Asian refiners are considering lowering run rates and curbing fuel exports as the widening Middle East war pushes Brent oil toward $110 a barrel. Chinese and Indian processors face soaring crude premiums from Africa to Latin America and may prioritize domestic markets, echoing tactics from the conflict's early weeks. Discussions remain tentative, but plunging inventories could force action: diesel stockpiles at Chinese state-owned suppliers hit a 15-month low, gasoline is at the lowest since 2022, and Singapore distillates are well below the five-year average.

The global refining sector is near capacity limits, with Middle East and Russia-Ukraine wars crimping exports from two major hubs. Diesel prices have surged more than twice as much as crude since the US-Iran conflict began. Linh Tran, analyst at XS.com in Ho Chi Minh City, warned that if China and India cut shipments, Asia could lose significant volumes offsetting lower Middle East and Russian exports, straining diesel and jet fuel most.

Europe's winter stockpiling will worsen the diesel crunch. Unlike early war days, crude flows through the Strait of Hormuz are at just over half pre-conflict levels per Clarksons Research, but Houthi gains in Yemen, Red Sea attacks, and the closure of Saudi Arabia's East-West pipeline have driven a recent price surge.