Changes in energy markets due to war in Iran (as of Apr 26)

Crude

- Japanese refiners were seen increasing alternative crude purchases, including crude from Kazakhstan

- Releases of national strategic petroleum reserves continued amid disruptions to Middle East crude supply

- Indian refiners were seen stepping up purchases of Russian crude

- Supply of Iranian crude was halted following US port blockades

- China requested independent refiners to maintain operating rates

- Prices for Angolan and Nigerian crude plunged sharply on weakening demand

- PV Oil was seen refraining from spot sales, prioritizing domestic supply

Japan Domestic

Products

- Gasoline began to be widely available

- The price difference between affiliated and non-affiliated oil products has decreased significantly.

- Diesel fuel tenders for public buses are being awarded one after another while revising delivery dates and quantities.

- A-fuel oil seems stymied

- Proposals for movement restrictions begin to emerge from within the oil industry.

- Liquidity in the TOCOM futures market decreases again due to resumption of subsidies

- Interest in market prices after Golden Week

Petroleum

Products

- Oversupply concerns emerged for gasoline in Northeast Asia, due to increased supplies from India and Europe and recovering refinery run rates

- Japan delivery naphtha prices peaked, with procurement of non-Middle Eastern cargoes advancing and rising cracker run rates in China and South Korea

- Reflecting soaring jet fuel prices, many flight reductions were observed across various countries, and demand significantly declined

- Buying interest for gasoil from Australia and Southeast Asia softened, due to soaring prices leading to a slump in domestic demand

- With Asian market prices at a premium compared to European and US markets, a large volume of middle distillates from the US and India flowed in

- Amid supply concerns, weak bunker demand impacted, leading to an easing of fuel oil supply/demand fundamentals

Petrochemicals

- No severe delays in restart of naphtha crackers in Japan

- Japan domestic naphtha prices estimated to be Yen 100,000's-110,000's/kl for April-June, possible demand reduction depending on perceptions of future price drops

- In Japan domestic polyolefin market, buyers have to accept rise in prices and need room to pass on rise to downstream products

- South Korea to provide subsidy on naphtha and alternative feedstock procurement for stable petrochemical production

- Ability to procure petrochemical feedstocks differs with countries, only production plant in Vietnam shut down

- China's presence as exporting country of basic petrochemical products increases, replacing Middle Eastern countries

- Supply concerns ease and focus shifting to pass on rise in prices to downstream products, market remains high

Ammonia

/Hydrogen

- Middle East-loading ammonia prices east of Suez surged amid reduced supply

- Ammonia exports from China declined, pushing up prices across Asia

- Tampa ammonia prices for May were seen potentially rising into the $900's/mt

- Fuel cell vehicle (FCV) sales in fiscal 2025 were seen falling by around 20% year on year

- Tokyo unveiled Japan's first hydrogen fuel cell-powered vessel

- Gifu University opened a demonstration hub for hydrogen and ammonia within its research center

Woodpellet

- Concerns over marine fuel supply rose following the closure of the Strait of Hormuz but were later seen easing

- Fuel prices surged across Asian countries, pushing up log prices

- In addition to higher raw material costs, manufacturing and transportation costs also increased

- Some power generators in Japan saw their burden of bunker adjustment factors (BAF) increase sharply on a temporary basis

- Some Japanese power generators were seen moving to secure forward cargoes

- Spot procurement appetite among Japanese power generators remained subdued

- The rise in FOB Vietnam market levels was seen as limited

Carbon

Credit

- Fossil fuel procurement prioritized, and emissions trading put on the back burner

- Effect of increased emission factors on carbon trading prices expected to be seen in 1 to 1.5 years

- Expectations emerge that the government would adjust the supply/demand gap and provide allocation compensation

Used Cooking

Oil (UCO)

- FOB Japan market levels were unchanged, as bullish and bearish factors offset each other

- For FOB China, interest in sourcing cargoes for Europe increased

- Japan domestic market was firm, with supply volumes declining and upward price expectations remaining entrenched

- In the Japan domestic recycled oils market, substitution demand for gasoil and fuel oil surged in response to Middle East tensions

- Cooking oil prices were set to rise from Jun 1, which was also viewed as a factor reducing supply of used cooking oil

- The US Environmental Protection Agency's biofuel blending mandate intensified competition for used cooking oil

- Japan domestic prices for recycled oils were largely viewed as having upward momentum

SAF/HVO

- Reflecting soaring jet fuel prices, several airlines in Asia reduced flights. Demand for SAF also stalled.

- The European Union (EU) plans to implement measures to support the supply and use of SAF and synthetic fuels (e-SAF) within the region.

- HVO market surges in Europe on strong demand in Germany and the Netherlands as a substitute for conventional gasoil

- In the Asian market, price fluctuations for both SAF and HVO remained minimal

LNG

- NEA spot prices show downtrend due to peace talks, lower than level immediately after outbreak of war

- North-East Asian buyers adopting wait-and-see stance, trading activity subdued

- South and Southeast Asia actively seeking alternative cargoes

- Qatar's new project likely to face delays of over a year

- Qatar Energy begins delivery from new US project

- Labour disputes at Ichthys project accelerating supply cuts

- Optimism for replenishment of European gas stocks

LPG

- KPC declared Force Majeure on supply in May

- Saudi Aramco canceled May term supply following April

- India trying to procure FOB USGC cargoes amid supply shortage

- US Enterprise began trial propane loading

- CFR Far East market softened on surplus US‑origin propane

- Some importers were seen having their mandatory private stockpiling requirements eased.

- Wholesale market in Japan also saw increased propane availability

Bunker

- Middle East bunker demand sluggish on reduced vessel deployments.

- Japan sees surplus bunker supply in Tokyo Bay, Chukyo as Japanese vessels shift to taking bunkers overseas.

- South Korea bunker prices soften further amid weak demand, intense price competition.

- China's bunker market well-supplied as Iran, Russia imports rise after deregulation.

- Singapore bunker demand remains sluggish.

- Durban, Port Louis see increased bunker demand as Fujairah alternatives.

Power

- Electricity spot prices in Tokyo area reached a high of over 60 yen. This is the first time the price has been at 60 yen since October 2025.

- Due to abundant solar power generation and high fuel prices, the price difference between daytime and evening has widened.

- Trading in electricity futures decreased due to the volatile fluctuations in fuel prices.

- Some foreign companies withdraw from Japan power market due to fluctuations

- Fuel adjustment charges will rise from June 2026. A further significant increase is expected from July 2026.

- The number of facilities reducing output, such as LNG thermal power plants, is increasing. This may be a move to curb fuel costs.

Urea

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- Urea supply via the Strait of Hormuz effectively disappeared

- Supply/demand conditions tightened in countries with heavy dependence on Middle Eastern urea supply, including India and Australia

- China continued export restrictions beyond May in order to secure domestic supply

- Perceptions of supply shortages intensified across Asia

- Urea import prices in Japan surged, heightening supply concerns

- AdBlue manufacturers successively notified price hikes

- AdBlue BIB products turned scarce, as inner polyethylene bags could not be manufactured due to naphtha shortages

PKS

- Suppliers' selling interest weakening amid rising fuel costs

- Coal prices remain high and biomass fuels demand rising

- Firm global palm oil prices pushed up Indonesia's export taxes

- Shipments resumed from Tanjung Buton port

- Malaysian supply is tight and the price gap with Indonesia narrowed

- Japanese power producers rushed to secure supply

- Freight rates softened slightly as shipowners resumed offering

Bioethanol

- Brazilian ethanol saw a temporary stagnation in March and April due to depleted stocks and freight uncertainty caused by the blockade of the Strait of Hormuz, but negotiations gradually resumed from early April. Recently, prices have been on a downward trend due to the resumption of sugarcane harvesting.

- US-produced ethanol also rose temporarily in line with higher crude oil prices, but the increase leveled off in late April.

- As countries move away from petroleum, progress is being made in increasing the ethanol blend ratio. Brazil plans to introduce E32 in the first half of the year, the US has tentatively lifted the ban on E15, and Vietnam has brought forward the introduction of E10 to April. India, Southeast Asia, and other countries are also expanding their ethanol procurement.

- Ethanol freight rates rose sharply in early April. Demand for ethanol remained strong due to increased inquiries. However, the closure of the Holmes Strait has also had an impact on bunker costs.

- Rising fertilizer prices raise concerns about a decrease in corn planting.

Biodiesel/FAME

- No major changes are seen in the B5 and B100 market conditions.

- The general diesel oil supply system is a concern, with some parts feeling stalled.

- FAME manufacturers are concerned about methanol shortages.

- Interest in next-generation fuels slightly recedes as interest in existing fuels is reaffirmed

- Related councils take a step forward in the new fiscal year, including improvements to BDF standards and taxation.

Biobunker

- Slower price hikes compared to conventional fuel oil, temporarily price spread against fuel oil reversed.

- Alternative fuel oil procurement considered, but no deals reached.

- Negotiating with shipowners a challenge; price spread inversion ended in April.

- Shipping companies prioritize lowest cost fuels amid soaring conventional fuel prices.