According to Gibson, “in the Middle East, CPP flows out of Yanbu remain disrupted under Houthi threat. However, clean exports from the Mideast Gulf and Gulf of Oman surged to around a preliminary 2.4mbd in September from 1.4mbd in August, partly supported by the complete recovery of the 922kbd Ruwais refinery, alongside an increase in Strait of Hormuz transits run mainly on regional producers’ fleets repositioned back into the region in recent weeks. A favourable East-West spread continues to push Middle Eastern and WCI middle distillate cargoes westwards, lifting LR demand. High cargo volumes are meeting tighter tonnage as active dirty-up activity continues — with at least 100 units of coated LR2 now engaged in dirty service, leaving overall LR tonnage fairly limited. A few westbound maiden Suezmax voyages have also been seen this month, whether reflecting the stretch on conventional LR tonnage or simply the economics of moving larger parcels westwards. LR2 (WCI-UKC) have climbed to high-$120,000s/day as of the latest rate data, from around high-$50,000s/day in August based on our assessment. MR earnings (TC12) also drew strength from the larger segments, rising to around $40,000/day from roughly mid-$10,000s/day over the same stretch, although eastward cargo volume declined with the shift in trade flows — ME/WCI clean product exports into the East have fallen sharply to around 500kbd in September from June’s peak of roughly 1.16mbd”.    Meanwhile, “activity within the Far East remains high, driven by strong exports out of the North. High margins are keeping refiners running at elevated rates, though the recent rise in crude oil prices is narrowing those margins. Preliminary AIS data shows Chinese product exports reached 1.08mbd in September, the highest level since March 2024, up from around 780kbd in July when the export ban was lifted. Regional LRs, which typically position in Asia Pacific after discharging naphtha cargoes, are increasingly being fixed onto long-haul westbound runs into East Africa and Europe — a favourable outcome for owners, since it removes the long ballast leg otherwise needed to bring vessels back East. These dynamics are also tightening LR supply in the Middle East”, the shipbroker noted.    Gibson added that “Pacific MR TCEs have surged to around mid-$60,000/day, more than double the mid-$20,000/day seen in early August. The Atlantic basket tells a much quieter story, holding in a narrower band and last near mid-$30,000/day — broadly steady rather than tracking the Pacific’s rally. The Atlantic MR market is mainly supported by USG exports, which have risen sharply alongside higher refining rates since the war began. Still, the West remains persistently short of middle distillate cargoes given the loss of Middle Eastern products, a squeeze deepened since Yanbu supply was disrupted. Hiccups in Russian refinery runs, following a spate of drone attacks, have compounded the tightness further. September flows show that Turkey and Brazil, traditionally the two largest buyers of Russian diesel, are now relying primarily on the USG, a clear illustration of how the supply map has been redrawn. On the other side of the Atlantic, the recently widened East-West naphtha spread has made eastbound economics more attractive, supporting LRs in the region, though the upside remains capped by sluggish Asian petrochemical demand”.    However, “the outlook remains clouded by uncertainty. Geopolitical risk continues to be the dominant swing factor across global CPP supply: any price change, refining margins and product spreads, which in turn can redirect trade flows, and a change in export policy anywhere could quickly dent cargo volumes and put downward pressure on rates. Rate volatility in crude segments could also cascade into clean segments — if crude strength persists, LR2 tonnage could tighten further still as lucrative earnings prompt more dirty-up activity, spilling over into further MR strength, though the remaining newbuild schedule (around 23 LR1/LR2s and 52 MRs due for the rest of the year) may cap how far rates can run”.    “In the East, market talk is building that Beijing may sharply restrict — or even suspend — October product export quotas, a reversal from August’s surge that would remove a meaningful chunk of the cargo volume currently supporting LR and MR demand out of the North. South Korea’s refining picture is also worth watching: despite efforts to diversify crude sources, the country still faces supply constraints and could again lean on its strategic reserve to bridge the gap — if supply remains constrained regardless, refining rates would come under pressure, and with them, clean vessel demand out of Korea. In the West, a possible US diesel export ban — still at the “studying feasibility” stage per the US Treasury — would be a bearish wildcard if enacted, as cargo volumes out of the region would decline. A recovery in Russian refining rates would also reshuffle flows, reducing reliance on USG supply and easing some current tightness. On the upside, winter heating demand and weather-related disruptions remain supportive factors that could keep rates elevated even as these variables play out”, Gibson concluded.