Winners and Losers in Oil: How the Middle East Conflict Is Rewiring Global Crude and Refined Product Supply
- Mar 4
- 10 min read
Enerdealers Editorial
A Shock Through the Arteries of Oil
The escalation of conflict involving Iran and its neighbors has turned the Strait of Hormuz into a high‑risk chokepoint for global energy flows, with up to 15 million b/d of Gulf crude and products potentially at risk of disruption. Oil prices have already jumped sharply, with Brent moving from the low‑70s to well above 80–90 USD/bbl in early March, while European gas and LNG benchmarks have spiked on fears over Qatari exports.
For traders, refiners, and policymakers, the question is no longer whether supply chains will adjust, but who gains pricing power and who faces structural disadvantage in crude, diesel, gasoline, jet/kerosene and LNG over the next 12–24 months.
The Immediate Shock: Crude, Products and LNG
About 15% of global oil supply, including crude, condensate and key refined products, normally transits the Strait of Hormuz; a partial or prolonged disruption would threaten roughly 15 million b/d of exports from Saudi Arabia, the UAE, Kuwait, Iraq, Qatar and Iran.
At the same time, some 81 Mt of LNG (around 20% of global LNG supply), mainly from Qatar, also passes through this corridor, making gas and LNG markets nearly as exposed as crude. Risk premia have surged across the barrel, with middle distillates (diesel and jet) leading due to the Middle East’s central role as exporter to Europe and Asia.
For refined products, the world enters this crisis with a trade map already reshaped by sanctions on Russia: the Middle East has become Europe’s largest diesel supplier, US Gulf Coast exports to Europe are elevated, and Asian flows are more tightly balanced. Any interruption or rerouting of Middle Eastern barrels therefore amplifies existing tightness, especially in diesel and jet, while raising freight, insurance and working‑capital costs along most routes.
Even though Saudi Arabia can partially reroute via its East–West pipeline to the Red Sea, most of its export system, and that of Kuwait, Qatar and the UAE, still hinges on secure passage through the Gulf.
Crude Exporters: Who Gains, Who Hurts
Major crude exporters
The top crude exporters globally include Saudi Arabia, Russia, the United States, the UAE and Canada, together accounting for a large majority of world seaborne crude trade in 2024. Their exposure to Hormuz and alternative routes will largely determine whether they emerge as beneficiaries or casualties.
Likely beneficiaries
United States (USGC, Permian, US offshore)
The US is among the top three crude exporters globally, with exports exceeding 3–4 million b/d and growing.
US Gulf Coast crude is well‑positioned to supply Europe and parts of Asia via longer‑haul voyages, capturing higher netbacks as Middle Eastern barrels face logistics disruption and risk premia.
US crude grades (WTI, WTI Midland, LLS) can replace some Gulf light and medium barrels in European refineries already adapted after the Russia–Ukraine shock.
Atlantic Basin exporters (Brazil, West Africa, North Sea, Guyana)
Brazil, Nigeria, Angola, and emerging producers like Guyana are part of a group of non‑Middle‑East exporters that have been growing exports and can pivot barrels towards premium markets in Europe and Asia.
Shorter transport distances to Europe and avoidance of Hormuz risk mean their barrels command higher relative value, especially for medium and heavy grades that can substitute Arab blends in complex European and Asian refineries.
Canada and Norway
Canada and Norway are among the top 10–15 crude exporters by value, with steady or growing export volumes.seair.co+1
With stable political risk and routes that do not cross Hormuz, their crude is likely to price at a growing premium to pre‑conflict levels, particularly for European buyers seeking security of supply.
Most exposed and damaged
Gulf producers relying on Hormuz (Saudi Arabia, UAE, Kuwait, Qatar, Iran, parts of Iraq)
Saudi Arabia, UAE, Kuwait, Qatar and Iran collectively account for a large share of global crude exports and are heavily dependent on Hormuz.
Even though Saudi Arabia can partially reroute via its East–West pipeline to the Red Sea (1–2 million b/d spare capacity), most of its export system, and that of Kuwait, Qatar and the UAE, still hinges on secure passage through the Gulf.
Iraq can increase flows via the Mediterranean, but capacity and political constraints limit full mitigation.
International oil companies concentrated in the region
For the majors, nearly 10% of portfolio value and about 12% of production passes through the Strait of Hormuz, making them highly exposed to any prolonged disruption.
While higher prices lift overall cash flow, asset‑specific risks increase, and value destruction is likely for projects with constrained evacuation routes.
Crude exporters: net winners vs losers
Category | Net effect on crude exports | Key regions/countries |
Non‑Gulf Atlantic exporters | Winner | US, Brazil, West Africa, Norway, Guyana |
Canada (pipeline and seaborne) | Winner | |
Russia (re‑routed barrels) | Mixed | |
Gulf producers via Hormuz | Loser (volume/logistics) | Saudi Arabia, UAE, Kuwait, Qatar, Iran, Iraq |
IOCs with high Hormuz exposure | Loser at asset level | Majors, NOCs with Gulf projects |
The Middle East has become the cornerstone of Europe’s post‑Russia diesel supply, with exports to Europe rising. At the same time, the region has pivoted increasing diesel volumes to Asia.
Refined Products: Diesel, Gasoline, Jet and Fuel Oil
Diesel and gasoil: the tightest link
The Middle East has become the cornerstone of Europe’s post‑Russia diesel supply, with exports to Europe rising from around 18.1 million mt in 2022 to 22.9 million mt in 2024. At the same time, the region has pivoted increasing diesel volumes to Asia, where seasonal heating demand and jet fuel recovery have tightened regional balances. A disruption in Gulf product exports therefore hits both Europe and Asia, with the immediate impact of widening diesel cracks and raising freight‑inclusive CIF prices.
Beneficiaries in diesel
US Gulf Coast refiners
Diesel exports from the USGC to Europe surged in late 2024 as European buyers diversified away from Russia and Middle Eastern short‑haul volumes.
With Middle Eastern supply uncertain, USGC refiners can push additional ULSD cargoes into Europe, supported by high refinery utilization and relatively stable domestic demand.
Indian refiners (export‑oriented complexes)
India has become Europe’s second‑tier diesel supplier, shipping about 7.1 million mt in 2024, driven by expanded and upgraded refining capacity.
Export‑oriented refineries in India can redirect barrels between Europe and Asia, capturing elevated margins as Middle Eastern flows are constrained or rerouted.
Complex refiners in Asia and the Mediterranean
Refiners in Singapore, South Korea, China (where not limited by export quotas), and the Mediterranean can run harder to supply deficit regions at higher diesel and gasoil premiums.
Higher middle distillate cracks incentivize maximization of diesel yields, although jet fuel demand and kerosene blending limit flexibility.
Losers in diesel
European end‑users and importers
Europe’s shift from short‑haul Russian diesel to long‑haul Middle Eastern, US and Indian supply after 2022 had already increased structural costs; disruption in the Gulf now adds risk premia and longer tonne‑miles.
Industrial, transport and heating users in Europe face higher prices and volatility, with inland markets particularly exposed to spikes in wholesale benchmarks.
Asian importers relying on Middle Eastern diesel
Record Middle Eastern diesel exports to Asia in late 2024 helped balance tighter regional supply caused by rising jet fuel demand and lower Chinese exports.
Any reduction or rerouting of these flows will tighten Asian diesel balances further, pushing up cracks in Singapore and other benchmarks, and putting pressure on import‑dependent markets.
Refining margins typically compress when crude prices spike, but in a disruption scenario where the system has to “run harder,” product cracks can stabilize at higher levels, especially for transport fuels.
Gasoline and naphtha
Refining margins typically compress when crude prices spike, but in a disruption scenario where the system has to “run harder,” product cracks can stabilize at higher levels, especially for transport fuels. US gasoline demand remains one of the most price‑sensitive segments, and higher retail prices can quickly erode volumes, moderating upside for gasoline spreads. Naphtha and petrochemical feedstocks tend to underperform in oil price shocks, as downstream demand is more elastic and petrochemical producers shift slates where possible.
Beneficiaries
USGC gasoline exporters and blendstock suppliers
With Atlantic Basin dislocations, US gasoline and blendstock exports to Latin America, West Africa and even Europe can benefit from price arbitrage, provided domestic demand softens.
Asian petrochemical producers with integrated value chains
Integrated refiner‑petchem complexes in Asia that secure cheaper domestic or term crude may gain relative advantage vs pure import‑dependent steam crackers.
Losers
Standalone European petrochemical plants
Higher naphtha and LPG feedstock prices relative to end‑product demand will squeeze margins, accelerating rationalization trends already visible post‑2022.
A disruption of Gulf jet exports lifts jet fuel cracks, especially at European and Asian hubs, and reinforces competition for middle distillate yield within refinery LP models.
Jet fuel and kerosene
Middle Eastern refineries are key exporters of jet fuel and kerosene, particularly into Europe and Asia. Strong recovery in aviation, especially in Northeast Asia, has already led refiners there to favor jet/kerosene output over diesel, tightening diesel availability. A disruption of Gulf jet exports lifts jet fuel cracks, especially at European and Asian hubs, and reinforces competition for middle distillate yield within refinery LP models.
Beneficiaries
Refiners with flexible middle distillate yields in Europe, Asia and USGC
Those capable of swinging between diesel and jet production at relatively low cost can capture higher cracks in both products, at the expense of less flexible peers.
Losers
Airlines and aviation hubs in Europe, the Middle East and Asia
Higher jet prices will raise operating costs and could pressure demand, particularly on marginal leisure routes, although military and strategic traffic may offset some civilian softness.
Higher bunker fuel demand supports fuel oil and VLSFO prices, especially near key bunkering hubs outside the conflict zone (Singapore, Fujairah if open, Rotterdam).
Fuel oil and bunkers
Shipping will increasingly avoid the Red Sea and conflict‑adjacent routing, diverting via the Cape of Good Hope, which raises voyage duration, fuel consumption and bunker demand. Higher bunker fuel demand supports fuel oil and Very Low Sulfur Fuel Oil (VLSFO) prices, especially near key bunkering hubs outside the conflict zone (Singapore, Fujairah if open, Rotterdam). Freight spikes propagate quickly into delivered product and crude prices, eroding margins for importers and amplifying the advantage of short‑haul and pipeline‑linked suppliers.
Gas and LNG: Qatar’s Risk, Others’ Opportunity
Around 81 Mt of LNG (roughly 110 bcm) transited the Strait of Hormuz in 2025, most of it Qatari supply headed to Asian markets under long‑term contracts. Any halt or severe restriction in this traffic would be as disruptive to LNG as a major pipeline outage in pipeline‑gas markets, with immediate spillovers into European hubs via competition for flexible cargoes. European gas prices have already jumped about 20% on heightened risk perceptions, despite Europe’s improved storage and non‑Russian supply position.
Beneficiaries
US LNG exporters
With Qatar constrained or perceived as risky, US LNG becomes the marginal swing supplier for both Europe and some Asian buyers, capturing higher JKM and TTF‑linked netbacks.
Portfolio players and traders with flexible FOB/ DES positions can arbitrage between Atlantic and Pacific basins more profitably.
Other LNG exporters (Australia, West Africa, East Mediterranean)
Non‑Hormuz exporters such as Australia, Algeria, Nigeria and emerging East Med projects gain pricing power as buyers diversify origin risk.
Losers
Qatar and Gulf LNG exporters
Qatar is highly exposed due to its near‑total reliance on Hormuz for LNG shipments, although long‑term contracts and sovereign relationships may mitigate volume losses once passage is restored.
Short‑term, Qatari cargoes face higher insurance and freight costs, and potential delivery delays, eroding realized revenues even with higher headline prices.
European and Asian consumers
Higher gas and LNG prices feed directly into power, industry and heating costs, particularly in Europe where spot exposure has risen despite long‑term contracts.
Asian emerging markets with limited capacity to pay spot premiums risk demand destruction or fuel switching back to coal and oil.
European gas prices have already jumped about 20% on heightened risk perceptions, despite Europe’s improved storage and non‑Russian supply position.
Strategic Takeaways for Traders and Decision‑Makers
For Enerdealers’ readership, the key is not only who gains or loses, but how to position:
Geography and route risk matter as much as geology. Low‑cost reserves in the Gulf lose some advantage if exports are constrained by a chokepoint, while more expensive barrels in the Atlantic Basin gain strategic premium.
Middle distillates remain the tightest segment. Diesel and jet cracks are likely to stay elevated vs historical averages, rewarding export‑oriented refiners in the USGC, India and parts of Asia, and penalizing European and Asian importers.
LNG and gas “re‑premiumize.” Qatar’s risk uplifts the value of flexible LNG, especially US volumes and non‑Hormuz origins, with knock‑on effects for coal and oil demand in power generation.
Freight and insurance become central variables. Route deviations around the Cape and war‑risk premiums raise delivered costs and extend tonne‑miles, strongly favoring traders with access to shipping and storage capacity.
Refining system has to run harder. As with the early Russia–Ukraine phase, higher throughput in less‑affected regions stabilizes margins at elevated levels until demand destruction sets in.
Conclusions
The Middle East conflict has transformed the Strait of Hormuz from a routine passage into a systemic risk for about 15% of global oil and nearly 20% of global LNG supply. While this shock lifts overall price levels, it clearly segments the market into net winners and losers among producers, refiners and consuming regions.
US, Atlantic Basin and some Asian exporters emerge as relative beneficiaries in both crude and refined products, leveraging their distance from the conflict and ability to supply Europe and Asia at higher margins. Gulf producers, Qatar’s LNG business, and import‑dependent regions in Europe and Asia bear the brunt of volume, logistics and cost risks, at least until security and flows through Hormuz are credibly restored.
For traders and decision‑makers, the next phase will be defined less by headline price spikes and more by structural repricing of route risk, freight and regional refining capacity. Those who integrate these new fundamentals into their crude sourcing, hedging and product placement strategies will be best placed to navigate an oil and gas market entering its biggest logistical test in decades.
Sources
Wood Mackenzie – “Middle East conflict set to drive oil and LNG prices significantly higher,” March 2026. [woodmac]
Le Monde – “Middle East conflict drives up oil prices,” March 2026. [lemonde]
Reuters – “Iran war throws oil market into biggest crisis in decades,” February 2026. [reuters]
Bruegel – “How will the Iran conflict hit European energy markets?,” February 2026. [bruegel]
TD Economics – “Escalating Middle East Tensions Jolt Oil Markets,” March 2026. [economics.td]
Seair Exim Solutions – “Top 10 Crude Oil Exports by Country in 2024‑25,” September 2025. [seair.co]
MFAME/Breakwave Advisors – “Global Diesel Trade Realigns: Middle East Shifts Focus to Asia,” December 2024. [mfame]
BBC News – “Oil and gas prices jump and shares fall as conflict escalates,” March 2026. [bbc]
World’s Top Exports – “Crude Oil Exports by Country 2024,” October 2025. [worldstopexports]
S&P Global – “European diesel trade map redrawn following Russia‑Ukraine conflict,” September 2025. [spglobal]
