From Sei Liu, Trixie Yap, Nicole Gao, and Seher Darin

Singapore, July 22 (Reuters) - The escalating trade war between the United States and Iran threatens Asian oil refiners' plans to increase output in August, potentially keeping global fuel stocks tight and pushing prices higher for longer unless China fills the gap.

Asian refiners, counting on more stable oil supplies, were expected to lead a recovery in global fuel production this quarter, but tit-for-tat attacks between the United States and Iran have once again hampered crude oil exports from the Gulf through the Strait of Hormuz, through which a fifth of the world’s oil supply passed before the war.

Now, the Iranian-backed Houthi rebels in Yemen have threatened to block Saudi exports from the Red Sea, which Energy Aspects research firm said could require diverting more than 3 million barrels per day of Saudi crude oil, which was heading to Asia via the Bab al-Mandab Strait, to much longer routes.

Three oil tankers carrying Saudi crude bound for China and India via the Bab al-Mandab Strait changed course in the Red Sea on Tuesday and opted to head towards the Suez Canal.

As a result, Asian refineries that had booked crude oil supplies for August are now bracing for delays in shipments from the Middle East, while refineries in the United States and Europe are already operating at near-maximum capacity.

Meanwhile, Russia is banning diesel exports because of Ukrainian drone attacks on its refineries, meaning the global supply of petroleum products will remain limited and prices for gasoline, diesel and jet fuel will rise.

High fuel prices have pushed refiners' profit margins to record highs in the United States and Europe, and to their highest level in two months in Asia.

Neil Crosby, an analyst at Sparta Commodities, said, "Profit margins are expected to remain high. Simply put, there isn't enough production capacity in the world to cope with the double blow of the closure of the Strait of Hormuz and the Russian export ban. Prices have to rise to reduce demand from end consumers."

For diesel and jet fuel, Asian refiners' profit margins jumped to more than $65 a barrel, up from just over $20 before the war.

Recovery is now uncertain.

Globally, forecasts released by the International Energy Agency on July 10 indicate that refineries will operate at a capacity of 81.6 million barrels per day in the third quarter, an increase of more than four percent compared to the second quarter, driven by the recovery in Asia, but this level is still four percent lower than the same period of the previous year.

In Asia, consultancy Wood Mackenzie predicted that refining rates would reach 30.37 million barrels per day in August, up from around 28 million barrels per day in May and June.

However, this recovery could falter if shipments through the Strait of Hormuz decline further and Saudi exports take an additional month to reach Asia due to detours around the west coast of Africa.

Formosa Petrochemical President K.Y. Lin said the Taiwanese company, a major exporter, had planned to increase its refining rate to 480,000 barrels per day, or nearly 90 percent of its capacity, in August.

Lin added, "Although Formosa has managed to agree on crude oil supplies to arrive in August, the delivery and arrival of some of these shipments remains uncertain at the moment, in light of the renewed conflict in the Middle East."

He explained that "small flows of crude oil exports through the Strait of Hormuz are expected to continue, but these quantities remain incomparable to pre-war levels."

A Chinese refining executive said he expects some delays in shipments during July and August, which will make it difficult to increase production. The executive declined to be named because he was not authorized to speak to the media.

China may help bridge the fuel supply gap.

Sumit Ritulia, an analyst at Kpler, said that refineries in Asia, excluding China, are operating at between 93 and 95 percent of pre-war levels.

In contrast, Chinese refinery utilization rates fell to just 58 percent of capacity in June. China has the greatest flexibility to increase production and is less dependent on imported crude oil than other countries, possessing large reserves that it can utilize.

Chinese refineries maintained low production levels amid weak domestic demand and restrictions on fuel exports. Beijing eased export restrictions for July, but it remains unclear whether this policy will continue in August.

Analytics firm Wood Mackenzie expects China's refining rate to rise to 13.96 million barrels per day in August, compared with 12.63 million barrels per day in June.

Analysts said that US and European refiners are expected to maximize production in the third quarter to take advantage of record profit margins, but they do not have much room to increase output.