Asia Naphtha Prices Drop as ADNOC Resumes Exports via Oman

Asia's naphtha prices have tumbled to their lowest since early March, driven by the Abu Dhabi National Oil Co (ADNOC) resuming exports via the Omani port of Sohar. This development comes as a relief to the market, which had been grappling with supply disruptions due to the U.S.-Israeli conflict affecting Iran.

Supply Chain Adjustments

ADNOC had halted exports of approximately 1 million metric tons per month from its Ruwais refinery in April. The geopolitical tensions had made the Strait of Hormuz a risky passage for shipping. By utilizing ship-to-ship transfers at Sohar, ADNOC has effectively bypassed these risks, allowing more naphtha to reach Asian markets.

• Minerva Pisces and Torm Gwyneth are among the tankers that have loaded naphtha from ADNOC vessels at Sohar.
• This alternative route is expected to stabilize supply flows to Asia.

Market Impact

The benchmark naphtha price for delivery in the second half of July has fallen to $788 per metric ton, a significant drop from the March high of $1,300 per metric ton. The refining margin over Brent crude has also eased to about $84 per ton.

"Naphtha prices are unlikely to return to peak March levels because demand is already weak," said an India-based trader.

Demand Dynamics

The International Energy Agency (IEA) projects a decline in global naphtha demand by 80,000 barrels per day to 7.136 million bpd this year. This demand destruction is partly due to insufficient feedstock supply leading to run cuts and force majeures across petrochemical complexes in Asia.

Price Outlook

With ADNOC's resumption of exports and the current demand scenario, naphtha prices are expected to remain subdued. Market participants will be closely monitoring upcoming data releases from the IEA and any geopolitical developments that could impact supply routes.

The market does not anticipate further supply cuts from the Gulf, suggesting a period of relative stability in naphtha pricing.