Recent geopolitical events have shuffled oil and fuel supply, resulting in tightness across markets in Asia and Europe, partially met by incremental supply from other regions. The closure of the Strait of Hormuz made market prices soar and several key suppliers restricted exports. This reduced Naphtha and petrochemical supplies from the Middle East to cutbacks in refined fuel supplies ex China, South Korea, Taiwan and Japan. With no end to the Middle East conflict in sight, the situation could deteriorate further.
In the meantime, South-East Asian leaders also endorsed measures aimed at easing the fallout from the US-Israel war on Iran, which continues to rattle global energy and trade flows. But Philippine President Ferdinand Marcos Jr, the ASEAN chair in 2026, warned that details of many of the measures still need to be ironed out. At a press conference at the ASEAN Summit in Cebu on 08th May, he said the grouping had produced a declaration calling for the ratification of the ASEAN Petroleum Security Agreement (APSA), which allows member states to share fuel during times of supply disruptions.
In this newsletter, ACFA will be looking at what can be considered to alleviate the given situation, examining local and regional fuel standards and the possibility to harmonise them. Furthermore, we shall be investigating what other factors may impact fuel harmonisation attempts, and whether harmonisation can allow for shared fuel reserves to improve supply resilience.
We have identified several regions where the harmonisation of fuel standards has been implemented with differing success levels and outcomes.
The European Union was the first union of several countries to successfully introduce regional fuel standards, launching the first Euro petrol specification as early as 1992. Over time, other European countries joined voluntarily, and product interchangeability is now guaranteed in most European markets. The motivation behind the harmonisation of standards originated from the intent to improve fuel quality and air pollution. Security of supply of refined products was not a primary problem in the European Union in the 1990s, as most countries had sufficient refinery capacity. In fact, Europe became a net exporter of gasoline in the early 1990s, when demand declined due to widespread dieselisation in Europe, and the increasing use of biofuels and improved fuel and engine efficiency also played a role.
The Euro fuel standards became the worldwide reference, directly applied in some cases or used as a benchmark in others. Today, countries with the most stringent fuel standards, namely China and the European Union, are preparing for the roll-out of Euro-7 vehicular emission and fuel quality requirements.
Further in this issue, we have reviewed different regions and countries where fuel harmonisation initiatives may positively and/or negatively impact gasoline supply availability. We examined the impact of mandating biofuels but major trends in demand (e.g. electrification) and supply (capacity consolidations). We looked at the pros and cons of harmonising fuel standards in North-East Asia and China, East and West Africa, the Middle East, Indonesia, and Australia.
Japan, South Korea and Taiwan largely harmonised their fuel and emission standards, when environmental pollution problems mounted in the 1990s. Over the past two decades, China has accelerated its programme to improve fuel standards and quality and has now overtaken its neighbouring countries in North-East Asia. China has also established itself as a strategic supplier to other countries in Asia and beyond, supplying all fuel qualities up to Euro-6.
During the Middle East conflict, China has suspended refined fuel exports to ensure self-sufficiency, but limited quantities are being released for countries in the Asia Pacific region.
While supply from China is helping to alleviate supply constraints today, increased exports will likely be sustained even post-crisis. This is due to structural demand reduction resulting from successful electrification efforts.
East Africa has also taken steady steps forward to improve and harmonise fuel standards. The East African Community (EAC)1 challenged its member countries to implement consistent fuel standards, requiring max 50 ppm Sulphur levels for petrol and diesel, with some regions moving toward a more challenging 10 ppm, largely effective since 2015. The new fuel standard also includes stricter limits on benzene (max 1%), aromatics (max 42%), and manganese (max 2ppm), making it very close to a Euro-4 equivalent. This initiative has successfully harmonised specifications across Burundi, Kenya, Rwanda, Tanzania, and Uganda aiming to reduce vehicle emissions and enable the use of cleaner vehicle technology, aligned with Climate & Clean Air Coalition (CCAC) Global Sulphur Strategy.
While Europe and North-East Asia are leading gasoline exporters given excess refining capacity, East Africa's oil industry remains underdeveloped to date and relies on Asia and Middle East for its transportation fuels. However, after the implementation of harmonised standards across the EAC, it can be concluded that the overall fuel availability across the East African Community has improved, following the removal of quality differences between the countries as a barrier for trade, which has also helped international suppliers to optimise on shipping and logistics.
Looking at other regions, we start with West Africa, where fuel standards in the past were left significantly below international norms elsewhere. European producers have been accused of selling inferior quality fuel in West Africa given the lower specification requirements. With petrol consumption growing rapidly in West Africa, consumers' environmental awareness also grew, particularly as low fuel qualities affected human health. In 2016, five West African countries (Nigeria, Benin, Togo, Ghana, and Cote d'Ivoire) agreed to ban import of inferior fuels from Europe. Eventually, the authorities in the Netherlands and in Belgium, which are the two main supply sources for gasoline exports to West Africa, have adopted local legislation in 2023 and 2024 respectively to stop sub-standard fuel exports to protect foreign environments, aligned with EU Directives & Additive Regulations. Quality requirements for local refineries have also strengthened, requiring Sulphur content in fuels to be capped at max 50ppm fuels, with Benzene restricted to max 1.0% and Manganese at max 2.0 mg/l.
While low fuel standards are obviously bad for the environment and human health, West Africa benefitted from the situation, as supply was maintained through imports while the local refining industry was ailing. Fuel prices remained affordable in a region largely comprised of low-income countries. We believe that an earlier push for a fuel-quality improvement programme across the region would have increased the cost for the consumer significantly. This could have led to additional unrest in a region, which is deemed as unstable anyway.
However, following the start-up of the Dangote 650k bpd mega-refinery near Lagos, Nigeria, the country is now considered to be able to cover most of the domestic gasoline demand, and excess supplies are already reaching neighbouring countries. Designed to produce low Sulphur and other fuel quantities to meet Euro-5 standards, supplies from the Dangote refinery will allow Nigeria and surrounding countries to enjoy improved fuel qualities, resulting in air quality improvements and healthier living conditions. The locally produced fuel should remain affordable, also as subsidy programmes in Nigeria and other countries support. After latest developments, ACFA now also considers West Africa as a region, which would further benefit from a region-wide harmonisation in fuel quality standards.
Moving onto the Middle East, where fuel standards still vary greatly, the situation is similar to that of West Africa. Massive investments in refining capacity over the last two decades have also altered the supply situation in the region, requiring significantly less fuel imports than previously. However, geopolitical challenges, strained bilateral relations and very different economic developments have contributed to a situation of diverse, fragmented fuel standards across the countries in the region. Countries like Saudi Arabia, Kuwait, the UAE and Israel have implemented Euro-5 standards, with Iran intending to switch to Euro-5, while Iraq and Yemen are trailing far behind, both only phasing out leaded gasoline in 2018.
With fuel demand in the region also growing above global averages and due to extreme weather conditions, a push for a higher quality, harmonised fuel standard is deemed as appropriate and should not have any negative consequences on supply availability overall. However, due to the above-mentioned country-specific differences, changing the requirements for fuel standards will unlikely, on its own, overcome existing trade barriers between the Gulf states.
In the Asia-Pacific region, Indonesia is another country that warrants closer examination. As one of the world's largest gasoline importers, fuel suppliers have also exploited the situation in the past, profiting from low-quality standards and a lack of quality controls. In fact, Jakarta is among the cities with the highest air pollution in the world. For years, the country has been trying to introduce a nationwide fuel standard based on the Euro-4 model but has encountered resistance from local industry and other interest groups – largely concerned about costs and fuel subsidy burden on fiscal spending.
However, requirements for imported gasoline are now largely aligned with Euro-4, which is still below the quality required in most countries around Indonesia. The government has made several attempts to better monitor and control the handling of the fuel import business and must introduce a stricter procedure for testing fuel quality.
While the overall development is moving in the right direction, albeit slowly, another worrying aspect and a potential challenge for Indonesia has emerged in recent years. Industry associations, among those the US ethanol lobby, and parts of the government are now pushing for a mandatory blending of ethanol into gasoline in the country. We consider this a very risky step, eventually leading to supply bottlenecks.
First and foremost, while the introduction of biofuels can reduce GHG emissions, broader environmental benefits of conventional ethanol blending with gasoline are highly questionable. Beyond this, implementing a biofuel mandate for gasoline will restrict the (import) supply availability of gasoline drastically. Oxygen-free gasoline is only available in limited quantities in its main supply spot in Singapore, and supplies of oxy-free gasoline from China, a growing supplier to Indonesia, are also limited. Even if the supply can be guaranteed, this will very likely involve higher costs, a development, which has plagued Australia for the last decade.
Like Indonesia, fuel standards in Australia are till date below international standards, which Australia appeared to have accepted amid limited refining capacity to supply the country with sufficient and affordable fuel. However, implementing biofuel mandates in parts of the country required the imported gasoline to be changed to oxy-free, which turned it into a so-called boutique fuel, which comes at a premium price over its calculated value.
We believe that implementing a standard such as Euro-5 in both cases, Indonesia and Australia would have been the better move, not requiring blending of certain products and eliminating others out of the gasoline pool. This would have increased and secured supply availability.
There is no one-size-fits-all approach to fuel harmonisation. While greater alignment of fuel standards can improve product interchangeability, reduce market fragmentation and strengthen supply resilience during disruptions, the benefits will vary depending on local market conditions, infrastructure readiness, refining capacity and policy objectives.
As recent developments in ASEAN, East Africa and other regions demonstrate, harmonisation can be a useful tool for improving supply flexibility and resilience. However, it should not mean converging towards the lowest common denominator. Rather, harmonisation efforts should support the adoption of cleaner, higher-quality fuels while balancing affordability, availability and energy security consideration.
Ultimately, the success of fuel harmonisation should not be measured solely by the ease of fuel trade or the ability to respond to supply disruptions. The more important question is whether these efforts translate into meaningful improvements in emissions, air quality and public health outcomes. As highlighted in a recent SGS article, fuel quality remains an important enabler of cleaner transport systems, underscoring the need for policymakers to consider both supply resilience and environmental performance when evaluating future fuel pathways.
1 EAC countries: Burundi, Democratic Republic of the Congo (DRC), Kenya, Rwanda, Somalia, South Sudan, Tanzania, Uganda
In this issue of our “In Conversation with” we talked to Mr. Jeff Hove, acting Vice President and Executive Director at the Fuels Institute. In recent years we have seen some initiatives to consider policies to ban the sale of vehicles equipped with internal combustion engines (ICE), predominantly emerging in Europe, but also spreading out in parts of Asia.
In this issue of our “In Conversation with” we talked to Dr Tilak Doshi, an energy sector consultant based in Singapore. Dr Doshi shared his views and observations about the global “2050 decarbonisation” plan and move towards Electric Vehicles (EVs) with us. We would like to thank Dr Doshi for his efforts to comprehensively answer our questions which provide some highly valuable and very interesting insights into this matter, highlighting a range of topics often overlooked in the political discussion between the various stakeholders in the race to save the world from impending climate catastrophe.
In this issue of our “In Conversation with” we talked to Dr Sanjay C Kuttan, Chairman of the Sustainable Infrastructure Committee at Sustainable Energy Association of Singapore (SEAS).
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