Escalating tensions in the Middle East Gulf have placed 57%, 1.33mbd, of Asia’s naphtha imports under a potential threat (share reflects 2025 average).
Northeast Asia is the most vulnerable to MEG naphtha supply disruptions, with close to 60% (1.03mbd) of the region’s naphtha imports originating from the MEG in 2025.
Southeast Asia follows suit as 16% (280kbd) of naphtha imports originated from MEG last year.
Since the escalation (Feb 28) and until March 5, only two naphtha-laden tankers passed through the Strait of Hormuz.
Some import-dependent ethylene crackers in Asia have started to reduce operating rates in response to supply concerns, on top of already-challenging margins. Most recently, South Korean YNCC declared a force majeure at cracker No.1 (915KTPA) and No.2 (900KTPA), reducing operating rates from 93% and 73% to 66% respectively (Argus Media).
This followed Indonesia’s Chandra Asri cracker (900KTPA) that declared force majeure just two days earlier (Argus Media). We could see more steam crackers and PDH plants reduce operating rates across Asia if supply concerns from MEG exacerbate further.
Main routes of resupply may not provide a cushion
As of March 5, ~47mb of naphtha is enroute Asia from outside regions – this is the lowest level observed in transit since June 2025.
Close to 20% of those volumes are from Russia, as the country’s naphtha exports to East of Suez reached a three-year seasonal high in February, reflecting 72% (~150kbd) of Russia’s seaborne naphtha exports last month. Russia could re-direct some of the volumes exported West of Suez, which have averaged ~140kbd in the last 6 months, toward the East, but these would take at least a month to reach Asia from Russia’s West-facing ports.
In the Mediterranean, almost half of Algeria’s February naphtha exports (~95kbd) were directed towards the East of Suez, still marking a two-year seasonal low. Algeria’s refinery output for naphtha fell below the 5-year average in December 2025 (JODI), whilst bad weather conditions constrained loadings throughout February. While loadings may recover post-weather disruptions, a significant growth in Med-to-East of Suez naphtha exports is not very likely due to Algeria’s domestic production.
The bottom line
The ongoing conflict in the Middle East will exacerbate supply risks for Asia’s naphtha market, keeping the E-W spread wide ($58.75/t on March 5), while replacement barrels from the Atlantic Basin could struggle to cover the supply shortfall from MEG.
This implies that Asian steam crackers will likely come under increasing strains to maintain operating rates at pre-conflict levels. The unavailability of Russian naphtha to some crackers (Japan, South Korea) could exacerbate the supply risk further.
Meanwhile, prompt Asia pro-naps still provide a strong signal for naphtha as favourable feedstock for steam crackers (-$10.50/t on March 5), after coming close to a switching threshold (-$41.50/t) on February 25.
Source: Vortexa
