Surging crude prices from the US-Israel war against Iran froze the US asphalt market this week, as buyers shifted to the sidelines while some refiners considered pursuing alternatives or limiting production in the coming weeks.
The war entered its sixth day on 5 March, and front-month Brent crude surged past $80/bl for the first time since January 2025. Brent crude has risen by nearly 18pc since late February.
Asphalt prices, meanwhile, have remained stubbornly low as seasonal demand has yet to kick off and most buyers' tanks remain full. As of 5 March, fob US Gulf asphalt was valued around 64pc of the cost of Brent crude while fob New Jersey was at 67pc. Over the past five years, Gulf asphalt prices have averaged about 90pc the cost of Brent crude in the first week of March.
Refiners in some regions have started to reduce asphalt production until prices rise to match crude input costs, as well as record-high increases in freight rates and bunkers.
In the US midcontinent, some suppliers have chosen to not make any mid-month rail adjustments but have noted additional volumes would not be available at levels previously negotiated for March.
Alternative options to asphalt are also significantly more appealing for refiners. Coker yields have climbed, and the Argus-calculated coker yield was a $98/st premium to asphalt late last week. Blending asphalt into fuel oil is also more attractive to refiners. When Brent crude surpassed $80/bl on 3 March, Gulf asphalt's value as a fuel oil blendstock surged into the $300s/bl.
Asphalt retail markets are also not immune, with several retailers heard sending out letters or calling customers to warn of volatility and possible steep price increases in the coming weeks.
Low US asphalt prices relative to other regions also spurred a flurry of interest from traders trying to work possible arbitrages early in the week.
US Gulf asphalt was valued $43/st below Mediterranean supply last Friday, and Mediterranean prices are expected to rise sharply following a steep jump in high-sulphur fuel oil values.
An arbitrage to Asia from the Americas could also open in April as major suppliers in south China reduce exports because of expected disruptions to feedstock supplies. Singapore's asphalt export prices have also surged, and market participants in the region are bracing for output cuts in April.
Traders have noted difficulty finding asphalt in this hemisphere, however, as US-based refiners have little appetite to produce additional barrels and target prices closer to the $400s/st fob.
