Middle East conflict could force up to 6 MMbpd crude run cuts across Asia
- Asian refineries face severe supply disruption as region's 65% dependency on Middle East crude is tested
If the Straits of Hormuz remain closed, Asian refineries could be forced to cut crude runs by approximately 6.0 million barrels per day (b/d) in April 2026 compared with pre-conflict forecasts, under a worst-case scenario in which existing emergency stockpiles are not used, according to Wood Mackenzie’s latest analysis.
According to the report, Asia imports 65% of its crude oil from the Middle East, the highest dependency globally, with Saudi Arabia, Iraq, and the United Arab Emirates serving as the top three suppliers. The current disruption exposes critical vulnerabilities in the region's energy security, with India facing the most severe pressure.
Indian refineries under maximum pressure. “Without Russian crude, India's dependency on Middle East crude exceeds 80% of the total import,” said Sushant Gupta, Research Director, Asia Pacific Refining and Oils at Wood Mackenzie. “Even maintaining 2025 levels of Russian imports only reduces this dependency to 50%. In addition to the supply dependency on the Middle East, India’s emergency crude stockpiles are one of the lowest in the region. So, Indian refiners are expected to lower utilization rates by around 12%, reducing crude runs by approximately 600,000 b/d as they struggle to replace Middle Eastern barrels.
Alternative sources scarce as China and India compete for Russian crude. “Asia's alternative crude supply sources are severely limited, with both China and India competing for Russian crude,” Gupta explained. “Asian refiners will struggle to fulfil crude buying requirements for April, leading to run cuts across the region. Refiners will be dipping into their buffer stocks, which is typically up to 15 days of their needs. Eventually, most countries will need to fall back on strategic petroleum reserves if the conflict continues.” “The timing, scale, logistics and crude quality of any government stock releases remain uncertain and could take time to materialize,” Gupta added.
Wood Mackenize’s current analysis assumes refiners can get access to the emergency stockpiles. Under this scenario, the impact on the crude run for April 2026:
- China: 750 kb/d (~4% decline in utilization), despite adequate stock levels
- India: 400 kb/d (~8% decline in utilization)
- South Korea: ~300 kb/d as refiners prioritize domestic supply
- Japan: Smallest run cuts despite high ME crude dependence, supported by ample crude stocks
Asian product exports plunge. The report also noted that the conflict could trigger a sharp contraction in Asian refined-product exports if countries stop exporting products either because of cuts in crude run or to build domestic stocks given the uncertainty in the market.
In March, gasoline export from the key exporters is expected to fall by around 750 kb/d month-on-month, while diesel/gasoil exports are expected to reduce by roughly 860 kb/d and jet fuel exports to drop by about 100 kb/d, according to Wood Mackenzie.
“China has instructed refiners to halt gasoline and diesel exports to prioritise domestic supply and stock building,” said Priti Mehta, Senior Research Analyst at Wood Mackenzie. “Refiners in India, Japan and South Korea are also becoming reluctant to issue export tenders amid uncertainty surrounding the Middle East conflict and increased government focus on ensuring adequate domestic supply.”
The decline in exports will further tighten an already constrained global refined-products market following disruptions to Middle Eastern supply.
Strategic crude stocks to be tested. “China’s accumulated crude oil inventories over the past several years would help mitigate risks to the refining sector if made available and should the Strait remain closed,” said Xinxin Bi, Senior Research Analyst at Wood Mackenzie. “Similarly, Japan and South Korea may need to rely heavily on strategic reserves given their large dependence on the Middle Eastern crude imports.”
Comments