Asia Oil Refiners Face Big Losses as War Upsets Hedging Strategy

Asian oil refiners are staring down deep losses after the Middle East war caused the benchmark Dubai price to soar, upending their hedging positions, according to traders.

The loss of Persian Gulf supply has spurred sharp rallies in the region’s oil grades that feed into the Dubai benchmark, which derivatives are priced off. Refiners typically take short positions — wagers that profit if prices fall — on related derivatives in the months prior to buying crude, as part of typical feedstock cost management, said the traders, asking not to be named as they’re not authorized to speak to the media.