Global fuel oil supplies face growing shortage risk as refiners prioritize other fuels

Monday 07 September 2026 - 10:10

By: Azzat Manal

Global fuel oil supplies face growing shortage risk as refiners prioritize other fuels

Global fuel oil markets are facing the prospect of a significant supply shortage in the third quarter as disruptions linked to the war in the Middle East encourage refineries to prioritize higher-demand products such as diesel, gasoline and jet fuel.

Energy consultancy Energy Aspects estimates that the global fuel oil market could record a supply deficit of around 218,000 barrels per day during the quarter. The projection would mark the company's first forecast shortage in the market since the third quarter of 2025. Rystad Energy has also warned that supplies are likely to remain extremely tight as instability continues to affect energy flows across the Middle East.

Asia is expected to bear much of the impact because of its heavy reliance on fuel oil arriving from the Gulf region. Singapore, the world's largest marine bunkering hub, imports more than half of its fuel requirements, which are close to one million barrels per day, according to data from Kpler.

Fuel oil inventories at major trading and storage hubs, including Singapore, Amsterdam-Rotterdam-Antwerp and Fujairah, have fallen by roughly 30% below their three-year seasonal average. At the same time, prices for low-sulfur fuel oil, a key fuel used by the global shipping industry, have climbed sharply.

In Singapore, low-sulfur fuel oil prices rose by about 76% following the outbreak of the Iran war, reaching approximately $825 per metric ton on September 1. This increase significantly exceeded the roughly 40% rise recorded by Brent crude over the same period.

Supply constraints have also been reinforced by weaker Russian fuel oil exports following Ukrainian attacks on Russian refineries. Russian shipments fell to a record low of around 591,000 barrels per day in August, compared with an average of more than 860,000 barrels per day in 2025.

Middle Eastern exports have also declined substantially. According to Kpler data, regional fuel oil shipments fell by 45% year on year to an average of approximately 447,000 barrels per day between March and August.

Kuwait's Al-Zour refinery, one of the region's major fuel oil suppliers, has also experienced a significant decline in exports. Since March, the refinery has shipped only one cargo equivalent to roughly 26,000 barrels per day, compared with around 191,000 barrels per day during January and February, Kpler data showed.

The tightening supply outlook could put additional pressure on shipping companies and power producers, both of which rely heavily on fuel oil in several markets. Prolonged disruptions could also increase operating costs across maritime transport and contribute to broader volatility in global energy prices.

The developments highlight the wider impact that geopolitical conflicts and refinery disruptions can have on refined petroleum products. While crude oil often attracts the most attention during supply shocks, shortages of specific fuels such as marine fuel and diesel can create equally significant challenges for international trade and energy security.