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Developments over the past week:

? The US Treasury has issued a 30-day waiver allowing Indian refiners to purchase Russian crude which is already loaded before March 5. The aim is to stabilize global supply amid disruptions from the Persian Gulf conflict. The exemption applies only to cargoes already at sea and expires on April 4, therefore limiting financial benefit to Russia. According to market reports, traders are selling Urals to India at a premium of USD4-5/b to Brent on a delivered basis for arrival at Indian ports in March and early April. This is contrast to a discount of about USD13/b for cargoes traded in February.

? Jet fuel prices across Europe, the US and Asia have surged to multi-year highs, rising faster than crude as Middle East export disruptions tighten global supply. European prices have reached the highest levels since 2022, while Asian jet fuel cracks have spiked sharply amid fears of refinery run cuts and supply shortages.

? Approximately 10 million barrels of crude were loaded from Saudi Arabia’s Red Sea port of Yanbu during the first four days of March, as the kingdom redirect export flows away from disrupted Gulf shipping routes.

In our opinion:

* The waiver offers temporary feedstock relief for Indian refiners by allowing stranded Russian cargoes to reach the market amid disruptions to Middle East supplies. At the same time, the move of Urals from USD13/b discount to a USD4-5/b premium to Brent underscores the tightness in prompt crude markets, where refiners are increasingly prioritizing security of supply over price.

* The widening in jet fuel cracks signals tightening middle-distillate balances and disproportionally benefits refiners configured to maximize middle-distillate yields and maintain export flexibility.

* Increased Yanbu loadings signal Saudi Arabia’s attempt to sustain exports via the East-West pipeline as Hormuz shipping collapses. However, limited Red Sea loading capacity relative to normal Gulf flows means the rerouting can only partially stabilize supply, leaving a persistent geopolitical risk premium in crude market

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