Mideast Naphtha Supply Tightens as Disruptions Mount

Why It Matters

The curtailment threatens Asian petrochemical feedstock security and could shift global naphtha trade toward costlier, longer routes, impacting margins across the industry.

Key Takeaways

• KPC force majeure cuts 560k t/month naphtha exports.
• Bapco fire removes 167k t/month from supply.
• Regional naphtha risk totals 4.18 mn t/month.
• Asian premiums hit four‑year high, $90.75/t.
• Buyers shift to Europe, extending transit times.

Pulse Analysis

The Middle East naphtha market has entered a period of acute stress as Kuwait’s state‑owned Kuwait Petroleum Corporation (KPC) and Bahrain’s Bapco Energies both declared force majeure on their exports. KPC’s notice removes roughly 560,000 tonnes per month—about 165,000 barrels per day—from the regional pool, while a fire at Bapco’s 405,000‑bpd Sitra refinery curtails another 167,000 tonnes per month. Additional delays from Abu Dhabi’s ADNOC and cargo cancellations by QatarEnergy, compounded by recent drone attacks on Ras Laffan and Duqm facilities, have pushed the total at‑risk supply to an estimated 4.18 million tonnes per month.

The supply shock is reverberating through Asian petrochemical hubs, where naphtha is a primary feedstock for ethylene crackers. On 9 March, Mideast Gulf naphtha premiums surged to $90.75 per tonne, the highest level in five years, prompting manufacturers to trim run rates and hedge against further tightening. With the East‑West spread easing only modestly, Asian buyers are eyeing European naphtha, where spring refinery maintenance and strong gasoline blending demand are sustaining prices. However, the longer Suez‑Canal route adds 10‑12 days to transit, eroding cost advantages.

Geopolitical volatility in the Strait of Hormuz and recurring drone threats have forced shippers to reconsider routing strategies. Oman’s Duqm refinery, located outside the strait, offers a viable alternative but faces its own operational challenges and higher freight rates. In the medium term, sustained disruptions could accelerate diversification of feedstock sources, encouraging investment in on‑shore Asian petrochemical capacity and tighter integration with European markets. Stakeholders will monitor force‑majeure declarations closely, as any prolonged export curtailment could reshape global naphtha trade flows.