As Middle East crude exports gradually return to pre-conflict levels while local refining capacity remains far from repaired, the center of gravity in the global oil market’s value chain is undergoing a notable shift. Asian refiners—including those in China, India, South Korea, and Singapore—are emerging as the most direct beneficiaries of this structural gap.
Data from commodity analytics firm Kpler show that weekly crude and condensate exports from the Middle East (excluding Iran) averaged 18.11 million tonnes in September, essentially back to levels seen before the outbreak of hostilities in February. The recovery on the refining side, however, is lagging markedly—Middle East refined product exports remain at less than half their pre-war volume.
This divergence between crude and refined product recovery has created a rare pricing window for regions with processing capacity. According to the Energy Institute, Asia holds roughly 37% of global refining capacity, with facilities in China, India, South Korea, and Singapore all well positioned to absorb large volumes of Middle East crude.
The Refining Gap: Roughly 20 Plants Offline
Before the war, Gulf oil producers had spent years expanding their downstream industrial chains. Saudi Arabia, Kuwait, and the United Arab Emirates invested heavily in refining and petrochemical capacity, seeking to extract more value-added from each barrel of crude and reduce their singular dependence on crude exports.
The US-Iran conflict upended that strategic deployment. Since hostilities began, approximately 20 refineries across the Middle East have been attacked, knocking out more than 2.3 million barrels per day of refining capacity. Refineries are among the most complex industrial facilities in the energy sector, far harder to repair than oil wells or pipelines. With regional security conditions remaining tense, damage assessments and reconstruction efforts have proceeded slowly.
This means crude production and exports will recover significantly faster than refining capacity. For the foreseeable future, Middle East producers will have to rely on refiners in other regions to process their own crude output.
Asian Refining Hubs Enter an Expansion Window
In the early stages of the conflict, Asia’s refining industry took a severe hit. Middle East crude accounts for roughly 60% of Asia’s total crude imports, and in 2025 that dependence meant the sudden supply drop directly caused utilization rates to plunge. International Energy Agency (IEA) data show Asian refinery runs fell by as much as 6 million barrels per day in April.
But conditions have since improved markedly. As Middle East crude exports have recovered, Asian refiners’ processing volumes have begun to rebound. The commercial incentive to raise output is substantial—margins for converting Middle East crude into diesel and gasoline remain near historic highs. More crude supply entering the market will push refiners to further raise utilization rates, expand exports, and capture a larger share of global fuel production.
Chinese refiners stand to benefit especially. According to Energy Institute data, China operates the world’s largest refining system, with capacity of roughly 18.8 million barrels per day. Although refined product export quotas typically cap actual export volumes, more abundant Middle East crude supply will improve refinery economics and strengthen the incentive to maximize throughput.
India is similarly well positioned. Since 2010, India’s refining capacity has expanded by about one-third to roughly 5.1 million barrels per day. The country also hosts the world’s largest refining complex—the Jamnagar refinery—which exports diesel, jet fuel, and gasoline to customers in Europe, Africa, and Asia. South Korea and Singapore, as key regional processing and trading hubs, also have the capability to handle larger volumes of imported crude.
Geopolitical Risk Still Dominates Near-Term Oil Prices
The premise of Asian refiners’ gains is the continued recovery of Middle East crude exports. But that trend now faces renewed uncertainty.
On October 12, international oil prices settled nearly 2% higher. Brent crude futures rose $1.93, or 1.8%, to settle at $106.65 a barrel, the highest close since September 15. US West Texas Intermediate (WTI) futures gained $1.89, or 2%, to settle at $93.74 a barrel.
The Iran-aligned Houthi rebels in Yemen claimed responsibility for an attack on Riyadh’s international airport over the weekend that killed 13 people and injured more than 300. Markets are concerned that Saudi Arabia—one of the world’s top producers—could face further threats to its energy production and exports. The Strait of Hormuz has already seen multiple tanker attacks this month, with the UK Maritime Trade Operations office reporting one tanker struck by a drone near Sohar, Oman, and another damaged while transiting the strait.
Goldman Sachs (GS) raised its December Brent price forecast from $85 to $90 a barrel and estimates that current prices embed a geopolitical risk premium of slightly more than $20 a barrel. The bank’s analysts also project WTI to average $81 a barrel in December 2026 and $73 a barrel on average in 2027.
Increased Russian diesel supply is unlikely to alter the tight refined product market in the near term. US President Trump announced that Russia would immediately supply more than 300,000 tonnes of diesel—roughly 2.25 million barrels—to US and global markets, with more to follow. After the announcement, diesel futures on the London ICE exchange fell 2.3% to $1,449 per tonne. But analysts note that Russian refining capacity has been severely damaged by recent Ukrainian attacks, casting doubt on actual delivery capability. PVM Energy analysts estimate that the roughly 500,000 tonnes of diesel Russia could release after lifting its ban amounts to just one day of US diesel consumption.
IEA Executive Director Birol called on member countries to reassess whether further releases from diesel reserves are needed and to prioritize boosting diesel supply, underscoring that the global refined product market remains tight.
Long-Term Signal: Oil Market Influence Shifting East
From a longer-term perspective, the recovery of Gulf crude exports is reshaping the influence map of global oil markets.
Since the conflict began, most replacement crude supply has come from producers in the Americas, particularly the United States. Kpler data show that in the second quarter of 2026, slightly more than one-third of global crude and condensate exports originated from the Americas, compared with an average of about 22% since 2024. This shift has given the US and its regional partners greater sway over trade flows and pricing dynamics.
The sustained return of Middle East crude will rebalance that equation. During the conflict, the market’s core bottleneck was who could supply enough crude; as Middle East exports recover, the key question is shifting to who can most efficiently process that crude and deliver fuel to end users.
In this environment, competitive advantage is tilting toward Asia’s large refining and export hubs. A decade ago, Gulf producers set out to capture more value per barrel by expanding refining and fuel exports. Today, this Middle East war has—at least in the near term—pushed them back to the bottom of the value chain. Until they complete reconstruction of damaged facilities, much of the value-added from Gulf crude is likely to be captured further east.