Middle East Conflict Cuts Global Crude Runs by 1.4 Million Barrels Daily

Global crude oil runs are projected to fall by 1.4 million barrels per day in the fourth quarter due to the extended Middle East conflict, according to Wood Mackenzie. The disruption is reshaping supply chains and refining margins, with Asia bearing the heaviest burden as regional demand drops by 1.24 million barrels per day in 2026.

Refiners in the United States and Europe have postponed scheduled maintenance to maintain output, while diesel markets remain supported by restricted Russian exports and winter heating demand. The consultancy notes that the scale of this disruption is without modern precedent, forcing a structural realignment of how crude is sourced and refined globally.

Asia Absorbs Largest Supply Shock

Asia-Pacific oil demand is forecast to decline by 1.24 million barrels per day in 2026, with recovery to pre-conflict levels delayed until late 2027. Petrochemical feedstocks such as liquefied petroleum gas and naphtha have suffered the most significant disruptions, particularly in markets reliant on shipments through the Strait of Hormuz. India is expected to lead the regional recovery, becoming the first major market to exceed previous demand levels, while China’s demand likely peaked before the conflict began.

Refining margins in Asia are expected to ease only after oil flows through the Strait of Hormuz normalize. Wood Mackenzie forecasts that dated Brent crude will settle between US$50 and US$60 per barrel once transit routes are fully restored, driven by non-OPEC production outpacing global demand growth in 2027 and 2028.

Crude Supply Routes Diversify

Middle East crude production is gradually recovering through shuttle transits and ship-to-ship transfers, but the pace of China’s inventory rebuild remains a key uncertainty for price forecasts. Asia’s crude import dependency is projected to reach 82%, with regional imports increasing by 1.5 million barrels per day by 2030. The supply mix is shifting toward longer-haul shipments from the United States and Latin America, reducing the Middle East’s share of Asian crude imports from over 65%.

Chemical Integration Drives Margin Advantage

Refinery competitiveness is increasingly tied to deep chemical integration, energy efficiency, and the ability to process diverse crude grades. Second-generation integrated sites with chemical yields above 40% are achieving significantly higher net cash margins than first-generation facilities. By 2035, nearly 80% of the best-performing refineries are expected to be Chinese assets with extensive chemical integration, highlighting a structural shift in the industry’s value drivers.