Crude and condensate arrivals into Asia and Oceania recovered by 1mbd m-o-m to 18.6mbd in May. The increase came despite China’s seaborne crude imports falling to a record low of 6.7 mbd, as Chinese refiners drew down onshore inventories and reduced spot purchases amid elevated crude premiums. Higher imports into the rest of Asia and Oceania more than offset the decline in China, supporting a recovery in refinery feedstock availability across the region. This article examines the shifts in crude trade flows into Asia and Oceania, the implications for refinery runs and refined product arbitrage flows, as well as pockets of vulnerability that remain despite improving crude supply conditions.
The recovery in regional crude arrivals was driven primarily by higher inflows from the Wider Arabian Sea and the Americas. Saudi Arabia utilised the East-West pipeline to divert crude loadings from the Middle East Gulf (MEG) to Red Sea export terminals, with the majority of these barrels ultimately destined for Asia. In the UAE, crude loadings from Fujairah to Asia continued to rise m-o-m in May. Meanwhile, India’s seaborne crude imports recovered to pre-conflict levels, supported by record arrivals from Russia and Venezuela. Excluding China and India, refiners across Asia increased procurement of Atlantic Basin (AB) crude as they sought to diversify supply sources and replace disrupted Middle Eastern barrels. In particular, U.S. crude arrivals into the rest of Asia rose to record highs in May.
Refined product flows from the Atlantic Basin ease
The recovery in crude arrivals, and crude stock releases in several countries such as South Korea and Japan, improved feedstock availability in the region and supported a rebound in refinery runs. As shown in the chart below, CPP and DPP liftings from Asia and Oceania increased since late May, signalling stronger refinery utilisation and refined product supplies. Higher refinery throughput also helped ease product tightness across the region. East-West price differentials for naphtha, gasoline, diesel and LSFO narrowed during May (source: Argus), reducing the economic incentive to move barrels to the Pacific Basin (PB). As shown in the chart below, AB-to-PB refined product flows have retreated from the record highs observed in March. We expect this trend to continue in June as improving refinery runs reduce Asia’s dependence on imported products. As a result, AB-to-PB arbitrage flows are likely to ease further in the coming weeks.
India’s LPG balance remains under pressure
While crude supply conditions have improved across much of Asia and Oceania, vulnerabilities remain in selected product markets. A case in point is India’s LPG balance. Despite recovering m-o-m in May, LPG arrivals into India remain more than 50% below pre-conflict levels recorded in January and February 2026. Additional supplies from alternative sources such as the U.S. Gulf Coast have not been sufficient to offset the loss of Middle East Gulf volumes. As a result, the Indian government is likely to maintain its early-March directive for refiners to maximise LPG production and restrict the use of propane and butane as petrochemical feedstocks.
This policy shift has forced petrochemical producers to substitute LPG with naphtha, contributing to higher naphtha imports since March.
We therefore expect India’s naphtha imports to remain structurally elevated in the near term to sustain petrochemical operations.
Outlook
The recovery in crude arrivals suggests that Asia’s supply chain is gradually adapting to disruptions through increased sourcing from the Atlantic Basin, alternative export routes in the Middle East and inventory draws. Improved feedstock availability is supporting higher refinery runs and easing the need for refined product imports into the region. However, LPG remains more exposed given Asia’s heavy reliance on Middle Eastern supply. While crude trade flows have largely adjusted to the disruption, downstream LPG markets continue to face supply constraints. As a result, pockets of vulnerability remain despite the broader recovery in crude imports, particularly in countries such as India where policy intervention has reshaped feedstock demand and trade flows.
Source: Vortexa
