-- Global oil markets moved in conflicting directions, reflecting geopolitical uncertainty and uneven regional supply trends, Neil Crosby, Head of Research at Sparta Commodities, said in a Wednesday note.
Ongoing developments tied to Iran continue to drive volatility, with negotiations and even plans for talks expected to be prolonged. Prices in some parts of the market suggest expectations of stability, but analysts caution that any lasting resolution remains uncertain.
In Asia, refined fuel prices have come under pressure. Singapore gasoline and diesel benchmarks have dropped sharply compared with Western markets this week. Analysts say this likely reflects a surge in cargo arrivals after heavy shipments in recent months.
Refinery cutbacks in Asia have also been slower than anticipated. This may be due to temporary supply buffers, including oil stored at sea and drawdowns from commercial and government reserves.
Combined with weakening demand, driven by policy measures and high prices, this has contributed to short-term price softness.
"But make no mistake, the loss of AG [Arabian Gulf] crude will necessitate lower and lower Asian refinery operations over time, so Eastern product pricing may well rapidly correct back," Crosby said.
In the US, oil inventories are now declining significantly. Total stockpiles, including the Strategic Petroleum Reserve, fell by more than 2 million barrels per day last week.
At the same time, US crude exports are climbing, supported by strong demand from Asia. Refined product exports are also elevated.
A drop in US refinery runs, despite relatively strong margins, is adding pressure to domestic fuel supplies. While lower distillate prices have supported exports, inventories in key regions such as the East Coast and Gulf Coast are expected to draw down quickly.
"It makes perfect sense that US oil is being drawn upon globally; but US prices will eventually, perhaps quickly, rise to defend their own inventory," Crosby said, adding that the global supply crunch is yet to be felt in full force.