Middle Distillates
Market Overview
Diesel
Singapore diesel cracks surge close to 70$/bbl in symphony with Europe and US diesel cracks that exploded due to a very weak inventory position coupled with multiple unplanned refinery outages, most notably on Jizan and major Russian kits.
The Sep diesel-mogas spread in Singapore has also widened to multi-year highs of 47$/bbl, which would push refineries to maximize any distillates they can at the expense of mogas.
In a VGO-constrained world and when crude availability is at risk, this would mean the VGO is preferentially routed into the HCU instead of the FCC.
Sep GO E/W has corrected enough to pull Indian barrels into Rotterdam vs Singapore.
However the Sikka arb is even more open to the Med if the cargo moves via the Red Sea, likely due to extended Jizan outage and reduced CPC availability.
Kero
Singapore regrade in prompt months remain below zero, but turns positive from October.
Seasonal stockbuilding for heating in Japan increases kero demand in winter.
Arbs from North East Asia and South East Asia remain open into USWC throughout 2026.
