Premiums for naphtha cargoes loading in the Mideast Gulf surged to a two-year high today, underpinned by concerns over potential supply disruptions at regional refineries as the US-Iran conflict escalates.
The Mideast Gulf naphtha premium to average spot assessments rose to $42.75/t today, 2 March, Argus estimates, its highest since it touched $44.75/t on 24 March 2024.
The conflict has seen airstrikes across the Mideast Gulf region, with debris falling near several key refineries. The region's main naphtha exporters said that operations remain largely unaffected, but traders remain wary of supply risks if the conflict continues. Iran has already signalled it will not engage in negotiations with the US, raising concerns of a prolonged standoff and risk of regional instability.
State-owned QatarEnergy reported drone attacks on facilities in Ras Laffan and Mesaieed Industrial City, temporarily halting output of LNG and related products. The company operates two 146,000 b/d condensate splitters at its Ras Laffan complex, and any disruption to them could potentially reduce naphtha output from the Mideast Gulf's second-biggest supplier to Asia-Pacific. But no confirmation has been provided on which specific facilities were affected, making it difficult to assess the impact. Ship-tracking data from Kpler showed that two vessels, the Zenovia Lady and the Front Cheetah, which were placed on subjects today to deliver 72,000t and 76,000t of naphtha, respectively, have been idled since the attacks on 28 February, indicating delays in loading operations.
It is also unclear whether operations at Shell's 1.1mn t/yr Pearl gas-to-liquids (GTL) plant at Ras Laffan have been affected, which could further affect naphtha supply.
Qatar exports an average of 970,000t of naphtha each month, with cargoes from Ras Laffan accounting for 20pc of total Mideast Gulf volumes in 2025. The majority of Qatari cargoes are shipped to South Korea, Japan, China and Singapore.
Oman's Duqm Port was struck by drone debris, causing operational disruption, although it remained unclear whether the adjacent 255,000 b/d Duqm Refinery was damaged. Duqm Refinery has been exporting an average of 220,000t of naphtha per month since becoming fully operational in 2023.
In Kuwait, state-owned KNPC reported today that debris fell on the 346,000 b/d Mina al-Ahmadi refinery, but operations were unaffected. Market sources familiar with the facilities confirmed that other major Kuwaiti refineries, including the 454,000 b/d Mina Abdullah and 615,000 b/d Al-Zour refineries, were operating normally without disruption. Kuwait's refineries together supply roughly 720,000t of naphtha every month on average. Saudi Aramco also temporarily shut its 550,000 b/d Ras Tanura refinery after a drone strike, citing precautionary measures, although videos online showed plumes of smoke rising from what appeared to be storage tanks.
The escalating conflict is threatening to disrupt Mideast Gulf naphtha exports to its largest market, Asia-Pacific. The majority of naphtha cargoes transit directly through the strait of Hormuz.
Security concerns intensified after at least three vessels were hit by explosive projectiles near the strait over the weekend, prompting shipping owners to stay away from the region entirely. The Joint Maritime Information Center (JMIC) has raised the threat level in the strait to "critical", underscoring the mounting risks to commercial traffic and increasing the likelihood of loading delays and disrupted flows.
Ship-tracking data from Kpler showed several Long-Range 1 and Medium Range tankers carrying naphtha idling near the strait, signalling potential delivery delays. The disruption is being compounded by suspended operations at Jebel Ali and Duqm ports.
