Sparta CEO Says ‘Products, Not Crude, Are the Real Story’

In an analysis piece sent to Rigzone on Monday focusing on oil market effects of the conflict in the Middle East, Sparta Commodities CEO Felipe Elink Schuurman highlighted that “products, not crude, are the real story”.

“While crude has grabbed headlines, the extreme price action is in refined products and particularly middle distillates,” Schuurman said in the piece.

“Jet fuel crack spreads in NW Europe have exceeded $90 per barrel, the highest since 2008. In Asia, the jet-diesel regrade went stratospheric,” he added.

“European diesel futures surged as much as 23 percent in a single session to two-year highs, outpacing gains in Brent crude. Singapore refining margins (gasoil crack) more than doubled in one week, reaching levels last seen after Russia’s invasion of Ukraine,” he continued.

Schuurman stated in the piece that three structural factors explain why products are leading crude.

“First, the crude displaced from Hormuz is predominantly medium-sour, the grade that produces the highest yield of middle distillates (diesel, jet, kerosene),” he said.

“Even when refiners can source lighter Atlantic basin alternatives (WTI, WAF, Guyana, Brazil), those grades produce more light distillates (gasoline, naphtha), not the products the world is short of,” he added.

“Second, jet fuel is structurally the most vulnerable product. It requires specialized storage (unlike diesel or gasoline), so strategic stockpiles are minimal. A disproportionate share of global jet supply originated from Arabian Gulf refineries and was exported through Hormuz,” he noted.

“The market has learned from June 2025 that jet cracks can remain elevated for weeks once a genuine supply shortage emerges,” he continued.

Explaining a third “structural factor”, Schuurman highlighted that “roughly 1.7 million barrels per day of refined product exports from the Persian Gulf have been disrupted, including significant flows of diesel, LPG, naphtha, and jet fuel”.

“This directly impacts refining margins everywhere outside the Gulf,” he noted.

Schuurman stated in the analysis piece that these crack spreads are the market’s signal.

“They tell refiners: keep running at any cost,” he pointed out.

“They tell consumers: start cutting back. And they tell traders: the real dislocation is not yet on crude but on products,” he added.

“Remember we entered this conflict with ample supplies of crude (the famous glut), but with a shortage of global refining capacity,” he continued.

In an oil market press note sent to Rigzone on Tuesday, Wood Mackenzie highlighted that markets dependent on exports have been particularly exposed across multiple regions.

“Europe faces especially acute challenges,” Wood Mackenzie said.

“In 2025, Gulf refineries supplied 60 percent of Europe’s jet fuel and 30 percent of its diesel, volumes which are now entirely cut off,” it warned.

“Asia, which receives the majority of Gulf crude exports, faces equally severe pressure. Chinese, Indian, and other Asian buyers have been scrambling to secure alternative cargoes, driving up prices for West African and Latin American crude,” it added.

“Competition between Europe and Asia for limited non-Gulf supplies is intensifying price pressure across all regions,” it continued.

“The prospect of extreme tightness in refined product markets is reflected in super-high crack spreads. Jet-fuel cracks in NW Europe have traded at $100 per barrel (implying close to $200 per barrel Brent) and diesel cracks $70 per barrel, four to five times pre-war levels,” Wood Mackenzie warned.

An analysis piece on the conflict sent to Rigzone by the S&P Global team late Monday, which was penned by Jim Burkhard – who heads S&P Global Energy crude oil research – and the S&P Global Energy Crude Oil Markets team, estimated that the global supply of crude oil and products available to the market is down roughly 17 million barrels per day since February 27.

“Downstream and other oil infrastructure damage could potentially limit the pace of recovery of oil flows … including refined products,” Burkhard warned in the piece.

The piece highlighted that Asia “is the epicenter of the oil crisis”, noting that, “from an international physical supply perspective, the severity of the impact so far depends on direct exposure to Middle East supply of crude oil and products”.

“This means the impact is most keenly felt in Asia, a region that buys 80 percent of the 21 million barrels per day of oil exports that transited the Strait of Hormuz before the war,” the piece stated.

“Crude oil delivered to Asian markets was already over $100 per barrel last week. Jet fuel and diesel/gasoil prices, which hit record highs around the world during the war’s first week, are arguably under even more stress in Asia,” it added.

Burkhard pointed out in the piece that “it is in Asia where signs of market duress are most evident”.

“Half of the crude oil processed in Asia in 2025 came from the Middle East Gulf region. But duress is spreading,” he warned.

“The longer the Strait of Hormuz remains effectively shut, the worse the impact on physical supplies, inventories and prices – and not just in Asia,” Burkhard went on to state.

To contact the author, email andreas.exarheas@rigzone.com