Gasoline premiums in the Mideast Gulf have surged to their highest in more than two years, driven by tightening supply, rising freight costs and growing concerns over potential disruption following the outbreak of conflict between Israel and Iran.
The 92R gasoline premium in the Mideast Gulf rose to $5.75/bl on 19 June, the highest since April 2023. Backwardation — when prompt-month cargoes trade at a premium to later months — widened to $1.85/bl, the steepest level in two years.
Premiums had already been rising before the Israel-Iran conflict began on 13 June, averaging $5.22/bl earlier in the month. But a surge in freight rates and the potential for higher Additional War Risk Premiums (AWRPs) in the region have since added "logistical challenges", boosting premiums further, traders said. AWRPs cover vessels against war-related physical loss or damage.
While the conflict has not directly disrupted supply, traders voiced concern over possible interruptions to Iranian naphtha flows, which are used for gasoline production elsewhere in the region. Iran exported around 157,000 b/d of naphtha to the UAE in 2024, accounting for more than 63pc of the region's total naphtha imports, according to vessel-tracking data from analytics firm Kpler. Actual volumes may be higher, given the difficulty of tracking sanctioned Iranian cargoes.
Shipping firms remain cautious about sending vessels to load or discharge refined products in the Mideast Gulf, market participants told Argus. Reports of increased electronic interference and heavier marine traffic in the strait of Hormuz have caused delays and raised safety concerns. Freight rates for Long Range and Medium Range tankers could remain elevated in the near term.
The latest tender by Pakistan State Oil (PSO), a major gasoline importer, reflected the bullish sentiment. Trading firms Vitol, BB Energy and Oman's OQ Trading offered gasoline cargoes at premiums of $7–9/bl to the Mideast Gulf 92R spot assessment — up from $5–6/bl in earlier tenders this year.
Supply in the Mideast Gulf was already constrained by local refinery outages and maintenance. Saudi Arabia's PetroRabigh completed a planned 60-day full shutdown of its 400,000 b/d refinery in Rabigh in mid-June. This has been exacerbated by tighter supplies to the region from India, partly because of scheduled maintenance at state-owned MRPL's 301,000 b/d Mangalore refinery, which is expected to restart by 25 June.
Gasoline arrivals from India into the Mideast Gulf fell to 307,000t during 1–20 June, down from 460,000t in the same period in May, according to oil analytics firm Vortexa. Underscoring the tightness of the regional market, Nigeria's privately-owned 650,000 b/d Dangote refinery may send its first gasoline export cargo to the Mideast Gulf, according to shipping fixtures — an unusual trade flow prompted by constrained supply.
