Asian oil refiners are pressing Saudi Arabia to reconsider its long-standing crude pricing system as the escalating conflict in the Middle East sends shockwaves through global energy markets and disrupts traditional supply flows.

The appeal comes as the war involving Iran has sharply distorted the regional benchmarks used to price Saudi crude exports to Asia, particularly those linked to Dubai and Oman grades.

With supply routes through the Strait of Hormuz severely constrained and physical crude prices surging to extreme levels, refiners say the current formula no longer reflects underlying market realities.

The disruption has been profound.

A significant share of global oil flows has been curtailed as shipping through the Strait of Hormuz — a critical chokepoint — has been effectively halted, driving up the cost of Middle Eastern crude and forcing buyers to scramble for alternative supplies.

Asian refiners, heavily dependent on imports from the Gulf, have been among the hardest hit, facing rising feedstock costs, logistical uncertainty, and mounting financial losses.

Industry participants argue that the pricing system, which typically uses regional benchmarks to set official selling prices, is amplifying volatility under current conditions.

With benchmark crude values surging well above broader global indicators, refiners say they are paying inflated prices that do not align with demand for refined products, compressing margins and in some cases forcing production cuts or shutdowns.

The strain is already visible across the region.

Some refineries have reduced operating rates or declared force majeure on deliveries as supply chains falter and feedstock becomes more difficult to secure.

Others are turning to alternative sources, including increased purchases of crude from outside the Middle East, though these options often involve higher transport costs and operational adjustments.

The situation has also highlighted structural vulnerabilities in Asia’s energy system, where reliance on Gulf crude remains high.

Governments and companies are now accelerating efforts to diversify supply, draw on strategic reserves, and explore alternative energy sources to mitigate the impact of prolonged disruption.

Saudi Arabia, as the world’s largest oil exporter and a key supplier to Asia, faces growing pressure to adapt its pricing approach to the new market environment.

While the kingdom has previously adjusted its official selling prices to maintain competitiveness, refiners are now calling for a more fundamental reassessment of how prices are set during periods of extreme volatility.

The outcome of these discussions could have significant implications for global oil markets, as pricing mechanisms play a central role in shaping trade flows, refining economics, and broader energy stability at a time of unprecedented disruption.