Vitol CEO warns: Ongoing war drags on, strong signals of tightening supply in refined oil releases.

Russell Hardy, CEO of Vitol Group, stated at the Asia-Pacific Petroleum Conference hosted by S&P Global Energy in Singapore that the refined oil market is sending strong signals of tightening supply, while the outlook for crude oil remains relatively stable, with tanker traffic through the Strait of Hormuz having rebounded. He estimated that the total volume of oil transported through the strait is currently about 10 million barrels per day, of which 9 million barrels are crude oil and the rest refined products. However, Hardy acknowledged that there is uncertainty around this data, making it difficult to quantify the actual figures precisely. During his remarks on the fuel market on Tuesday, Hardy pointed out, "The current market supply and demand are extremely tight, with almost no room for flexibility." He added that global refined oil inventories have basically dwindled to bottom levels. Since 2026, the global oil market has been continuously impacted by escalating conflicts, including the U.S.-Iran war and the Russia-Ukraine conflict, with Ukraine launching multiple drone attacks on Russian refineries. Although crude oil futures have increased by about 60% this year, the refined oil market has experienced an even sharper rise, partly due to Russia imposing a ban on diesel exports. In the United States, most refineries are operating at full capacity, but nationwide stocks of distillate fuels (including diesel) have fallen to their lowest level for the same period in at least 25 years. At the same time, the retail price of diesel has also surged to historic highs. At the conference, Hardy stated that global refined oil inventories "are still being continuously depleted," and "our existing refining capacity is still insufficient to prevent inventory declines, with the remaining global buffer stocks being continuously consumed." In the Middle East market, traders are closely monitoring the physical throughput in the Strait of Hormuz, despite ongoing sovereignty disputes between the U.S. and Iran over the waterway, along with frequent incidents of attacks on vessels. Macquarie Group disclosed on Monday that approximately 7 million barrels of crude oil and refined products currently pass through this vital passage daily, while pre-war levels were around 20 million barrels. Hardy mentioned that Vitol's estimated throughput of 10 million barrels per day through the strait "cannot be guaranteed to be smoothly exported every day," as "it depends on the ships, insurance, and whether the crew from CKH HOLDINGS are willing to undertake this arduous task." He indicated that while this volume "may be sufficient to sustain current refining operations," the loss of around 2 million barrels per day in refined product exports from both the Middle East and Russia has made the severity of the fuel market crisis far worse than that of crude oil. Mark Turnbull, Senior Vice President of Global Trading at Phillips 66 in the U.S., stated at the conference, "Before this supply shock arrived, the refining system had almost no buffer." He stated that the U.S. refining system is operating at full capacity. Regarding China's demand, Vitol's Hardy expects that with the arrival of the year-end demand peak (increased winter fuel use), China's crude oil demand is likely to see some recovery. China had accumulated high strategic and commercial crude oil inventories prior to the outbreak of the U.S.-Iran war, which has led to a decrease in its imports by 500,000 to 600,000 barrels per day compared to the previous yearHardy believes this decline is "unsustainable." Data released on Tuesday showed that China's crude oil imports in August rebounded slightly from July, due to a small increase in cargoes from the Persian Gulf and refiners stepping up procurement from other sources, although the total import volume is still nearly a quarter lower than the same period last year.