European gasoline heads to Asia as Iran war sparks supply fears

By Mohi Narayan and Ahmad Ghaddar

NEW DELHI/LONDON, March 23 (Reuters) - European and U.S. gasoline cargoes are heading to the Asia Pacific after Asian prices surged on tightening supply due to the U.S.-Israeli war with Iran, according to trade sources and shipping data.

The war has disrupted crude and oil product shipments from the Middle East to Asia, causing Asian refineries to cut output and forcing fuel distributors to seek supply from as far as the United States and buy more Russian fuel.

The extra shipping costs will exacerbate already soaring fuel prices for consumers and businesses.

At least three gasoline cargoes totalling about 1.6 million barrels have loaded last week from Europe for Asia, according to traders and ship tracking data from Kpler, as companies including Vitol and TotalEnergies TTEF.PA ship the fuel to the East to cash in on better margins in Asia.

Vitol and TotalEnergies declined to comment.

Earlier, Exxon Mobil XOM.N booked U.S. gasoline cargoes for Australia.

Europe typically only sends small parcels of gasoline to the East of Suez markets, while its key markets are the U.S., Latin America and West Africa.

Asian refiners' profits from making a barrel of gasoline GL92-SIN-CRK from Brent crude are hovering near 2022 highs of about $37 a barrel over Brent crude last week versus $8 before the war.

"One key factor is refinery behaviour under crude supply uncertainty. As disruptions around the Strait of Hormuz increase feedstock risk, some refiners are becoming more cautious about run rates or export commitments," Nithin Prakash, analyst at consultancy Rystad Energy, said.

Even if inventories currently appear comfortable, lower refining throughput could tighten the supply outlook and support gasoline margins, he said.

Singapore inventories of light distillates, which include gasoline and naphtha, are about 6% higher than the same time last year, at 17.93 million barrels, LSEG data showed. STKLD-SIN

REGIONAL SUPPLY FALLS

Gasoline supply from within the region is falling as shipments from top fuel exporter South Korea are expected to drop to between 5 million and 6 million barrels in March from a three-month average of about 10 million barrels, preliminary Kpler and LSEG data showed.

China, another big supplier, has banned fuel exports to shore up its domestic market. Thailand and Vietnam have also restricted fuel exports.

Traders are now pinning their hopes on Asia's second largest fuel exporter, India, which typically sends about 40% of its monthly shipments of between 7 million and 8 million barrels to the Middle East, to pivot to the East.

India typically sends about 22% of its gasoline to Asia, LSEG data showed. However, the country's gasoline exports have plummeted to about 5 million to 6 million barrels in March from around 12 million barrels last month, preliminary LSEG and Kpler data showed, as state-run Mangalore Refinery and Petrochemicals MRPL.NS has temporarily suspended cargo loadings.