Ship fuel is running short because the US-Israel war on Iran and Russia’s war on Ukraine have disrupted crude supplies, while refiners are using more of their available oil to make higher-profit products such as diesel. The squeeze could raise freight costs and make some trade less economical.
Most large ships and oil tankers use heavy fuel oil, or bunker fuel. A shortage affects the vessels that carry cargoes and commodities around the world, creating a potential cost increase for manufacturers and consumers.
How conflicts are reducing available fuel
The war on Iran has constrained maritime trade through routes including the Strait of Hormuz. Before the war, about 20 percent of global oil and gas passed through the strait. Iran has also attacked oil facilities in the Gulf, while attacks by Yemen’s Iran-aligned Houthis around the Red Sea and Bab al-Mandeb have disrupted shipping and supply routes.
Russia’s war on Ukraine has added pressure to oil markets. Ukrainian drone attacks have affected Russian refinery output, reducing the amount of fuel oil available for export. Together, disruptions in the Gulf and Russia mean less crude is moving out of key producing regions. For additional context, see “Brent crude climbs as Strait of Hormuz deal remains uncertain”.
Key figures
- Middle East fuel-oil exports fell 45 percent year on year to an average of 447,000 barrels per day from March to August, according to Kpler.
- Energy Aspects expects a fuel-oil market deficit of 218,000 barrels per day in the third quarter.
- Russia’s fuel-oil exports fell to 591,000 barrels per day in August, compared with more than 860,000 barrels per day on average in 2025, according to Kpler.
- Singapore’s very low sulphur fuel oil price rose 76 percent since the war on Iran began, reaching just under $825 per metric tonne, or $130 per barrel, on September 1.
Why refiners are making less bunker fuel
Fuel oil is produced when crude is refined, alongside petrol, diesel and jet fuel. Refiners generally earn more from products such as diesel, so they have an incentive to direct more crude through secondary processing units that upgrade heavy residue into higher-value fuels instead of leaving it as ship fuel.
The Dangote refinery in Nigeria has increased exports of diesel, petrol and jet fuel while its fuel-oil exports have fallen, according to Kpler. Market observer Sunil Reddy said unusually high diesel profitability was one reason refiners were squeezing more diesel and petrol from each barrel, reducing supply to the bunker-fuel market. A related part of this story is covered in “How the Strait of Hormuz disruption lifted oil profits”.
Why Asia and global trade face pressure
Asia may be particularly exposed because of its reliance on supplies from the Gulf. Singapore, the world’s largest bunker hub, imports more than half of the nearly one million barrels per day of fuel oil it consumes.
Fuel-oil stocks in the Amsterdam-Rotterdam-Antwerp area of the Netherlands and in Fujairah in the United Arab Emirates are about 30 percent below their three-year seasonal averages, according to Reuters. The higher cost and reduced availability of marine fuel can feed into shipping prices and, if voyages no longer make economic sense, could interrupt some trade. The development of this issue can be followed in “Bab al-Mandab Strait Tensions Drive Brent Crude Above $100 Amid Middle East Crisis”.
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