Middle East crude oil exports rebound, soaring freight rates exacerbate profit pressures on Asian refiners

On October 19, Middle Eastern crude oil exports continued to rebound, but soaring transportation and insurance costs are severely squeezing refining margins for Asian refiners. According to HiLo Analytics, Asian refiners’ gross margin stands at approximately $40 per barrel; after deducting roughly $33 in freight costs, net profit shrinks to just around $7 per barrel—meaning freight alone consumes about 82% of gross margin. In contrast, the corresponding figure for refiners along the U.S. Gulf Coast and in Northwest Europe is only about 16%.

On the supply side, Kpler data shows that Middle Eastern crude exports rose to 15.4 million barrels per day (bpd) in September—roughly 90% of pre-war levels. Asia’s crude imports in October are projected to reach 23.5 million bpd, the highest since February this year. However, Iran’s ongoing attacks on tankers transiting the Strait of Hormuz continue pushing up freight and insurance costs, with transport expenses on certain routes now several times higher than pre-war levels.

To attract Asian buyers, Middle Eastern producers have been forced to slash crude prices significantly—some discounts reaching as high as $30 per barrel. Yet even with such aggressive price cuts aimed at boosting volumes, they still struggle to offset mounting logistics-related pressures. Should refiners further reduce operating rates—or shift to alternative crude sources—the Middle East’s export recovery could stall once again.