No. 516 | April 10, 2026

With the announcement of a two-week ceasefire between Iran and the United States, the average weekly price of FOB Gulf naphtha also decreased in line with oil, falling by $84 to $981/ton. As a result of this decline, the Gulf refining margin maintained relative stability at negative $1/barrel. With the onset of the Middle East war, naphtha feedstock shortages led to supply constraints in the ethylene market and supported the ethylene-naphtha margin. However, on the aromatic side, the lack of price growth for aromatics has put pressure on the paraxylene-naphtha margin and weakened the profit margins of aromatic units, directing naphtha towards blending pools. While the naphtha market had hoped for a replacement of some Middle Eastern naphtha from Russia, drone attacks in Ukraine on the Ust-Luga terminal created supply disruptions along this route and intensified supply constraints. The potential reopening of the Strait of Hormuz after the ceasefire, given the high transportation costs and limitations in the spot market, cannot compensate for the existing naphtha shortage in the market. Thus, it is expected that in the short term, the naphtha market will remain volatile and at support levels, following oil.

The global LNG market faced significant price fluctuations; at the beginning of the week, the JKM index reached a peak of $18.3/MMBtu due to political threats, but with the sudden announcement of a ceasefire on April 8, prices experienced a heavy drop of 9 percent. However, this downward trend did not last due to deep-seated distrust among traders, and prices rebounded to $17.4/MMBtu. In the European market, the NWE index experienced fluctuations between $15.2 and $14.7/MMBtu, and while total imports in the first half of April decreased by 10 percent compared to March, reaching 10.69 million tons, the 29 percent reserves of the European Union created a level of tolerance against supply disruptions. Meanwhile, steady demand in South Asia, which made LNG prices even more competitive than naphtha for the agricultural sector, along with the halt of pipeline gas exports from Iran to Turkey, caused international buyers to cautiously seek prompt cargoes. Underlying supply conditions, the critical situation in the Strait of Hormuz, where the security of 20 LNG vessels is at stake and an emergency status has been declared in Qatar Energy until April 15, continues to hinder the normal flow of goods despite the ceasefire. Alongside this physical blockage, the halt of pipeline gas exports from Iran to Turkey has increased cash demand pressure in the region, and despite a 50 percent return of production capacity in the Wytch Farm project in Australia, new labor strike risks in the Ichthys project have prevented a significant reduction in prices. Overall, the market has concluded that until actual shipping routes are reopened and vessels exit the strait, prices will fluctuate in the range of $16 to $18/MMBtu, and any negative signals from a ceasefire breakdown maintain the potential for prices to spike beyond $20/MMBtu in the shortest possible time.

Despite the decline in crude oil and natural gas prices upstream this week, the weekly average prices of propane and butane in the Persian Gulf increased by approximately $23/ton, reaching $916 and $945/ton, respectively. The fluctuating price behavior in the Persian Gulf, despite the correction of other prices (due to a temporary ceasefire in the Middle East), is attributed to serious supply constraints in the physical market. This situation has led to the price difference between the physical market and Aramco's futures prices reaching unprecedented levels (around $220/ton). It is estimated that since the beginning of March 2026, about 1 million tons (approximately 25 VLGC ships) of liquefied gas floating in the world has been reduced, which could continue to sustain supply constraints despite the easing of tensions in the Persian Gulf. In the Chinese market, propylene prices in the downstream faced a significant increase last month. The price levels of propylene in Northeast Asia reaching around $1300/ton (propylene-propane spread of about $390/ton) are due to rising feedstock prices for propane and a decrease in the operating rates of PDH units in China. It is worth noting that the operating rates of PDH units have sharply decreased to below 60% (compared to about 70% at the same time last year). In India, due to serious constraints in supplying liquefied gas for the residential sector, refineries are operating at maximum capacity. The increase in refinery operating rates could not only help cover part of the supply shortfall but also provide significant export margins for the export of refined products (such as gasoline and diesel) for this country. It is noteworthy that this country is striving to secure stable liquefied gas supplies by sourcing shipments from alternative sources (such as Australia). Given the drop in prices upstream and the limited price reduction in the Asian market, the premiums for selling products in Asian markets have undergone limited corrections, but these levels still show a considerable difference compared to their historical values.

Despite the fact that 95 percent of Japan's oil is dependent on imports from the Middle East and considering the halt in production in this region due to war, the Prime Minister of Japan announced that the country will soon release 15 days' worth of private sector reserves and one month of public sector reserves to the global market starting in early May. He also issued directives to control gasoline prices at an average of 170 yen/liter in order to regulate the market. The Prime Minister of Japan stated that this decision was made in response to tensions and conflicts in the Middle East, which have raised concerns about disruptions in global energy supply, ultimately aiming to ensure stability in crude oil supply. It is noteworthy that since March 16, the country has unilaterally and in coordination with other member countries of the International Energy Agency, begun to release its reserves to make available oil equivalent to 50 days of consumption. It was previously reported that as of April 6, Japan had reserves equivalent to 230 days of oil, including 143 days in government storage. It should be noted that with the reduction of available crude oil, Japanese refineries have reduced their utilization rate to 67.7 percent of the planned capacity in the week ending April 4, the lowest level since June.