Hardy, speaking at the Asia Pacific Petroleum Conference in Singapore, highlighted that the market is actively eating into existing global surpluses. The strain is concentrated in the downstream sector, where refined product output lags behind the steady supply of crude. While daily outbound flows from the Strait of Hormuz reach 10 million barrels, only a fraction consists of finished fuel products.

Structural constraints are tightening across key regions. Russian refinery output remains hampered by frequent drone strikes, prompting a government-imposed ban on diesel exports. Simultaneously, U.S. refineries have pushed utilization rates to unsustainable levels, reaching 98% nationally in late August with some regional plants exceeding 100%. Analysts at ING warn that the global refining system possesses virtually no slack to compensate for these concurrent supply shocks, a reality currently reflected in record-high middle distillate cracks.