The global fuel oil market remains squeezed by geopolitical tensions, reduced exports from the Middle East and Russia, and steady demand from the shipping industry, keeping prices for high-sulphur fuel oil elevated, according to Vitol.
Renewed hostilities around the Strait of Hormuz have added to supply concerns, with monthly exports of high-sulphur fuel oil (HSFO) through the strategic waterway remaining at least 800,000 metric tons below February levels. The figures include Iranian shipments, said Kieran Gallagher, Vitol’s head of Asia, during the Singapore International Bunker Conference.
Data from Kpler showed that exports through the strait averaged around 3.7 million metric tons a month between January 2025 and February 2026.
Although the current shortfall is smaller than the roughly 2 million tons of lost supply recorded in May, disruptions elsewhere are adding further strain. Attacks on Russian refineries have cut fuel oil availability by an estimated additional 1 million metric tons per month, Gallagher said.
The tightening market has driven prices sharply higher. Spot premiums for 380-centistoke HSFO stood close to $50 per ton this week, compared with just $5.10 on February 27, according to LSEG data.
Producers are also facing higher shipping costs as they move cargoes through the Strait of Hormuz. Increased freight charges and risk premiums reflect the growing difficulties of transporting supplies through a region critical to oil revenues, Gallagher noted.
The threat extends beyond production and export volumes. Continued attacks on vessels and energy infrastructure could disrupt supplies that traders currently expect to reach the market, potentially intensifying the squeeze.
Refiners turn to fuel oil as crude supplies face disruption
Supply pressures are also reshaping refinery operations in North Asia.
Some refiners in the region have shifted towards processing fuel oil through upgrading units rather than relying on crude oil, drawing more than 1 million metric tons of HSFO for November. The move follows recent interruptions to Saudi crude exports through the Red Sea, Gallagher said.
Replacing fuel oil with crude as a refinery feedstock will be crucial to easing pressure on the market, he added.
The picture is less strained for low-sulphur fuel oil. Higher exports from China, alongside shipments from Nigeria’s Dangote refinery, have helped improve availability. The Nigerian facility is exporting between two and three Suezmax-sized cargoes each month.
Gwadar emerges as an alternative bunkering hub
As instability in the Middle East complicates marine fuel deliveries, Vitol has expanded its bunkering operations to offer shipping companies more options.
The company began supplying bunker fuel at Pakistan’s Gwadar Port in July, providing an alternative to the United Arab Emirates’ Fujairah port, located just outside the Strait of Hormuz. The move is intended to serve customers operating across the Gulf region while reducing dependence on established supply routes exposed to regional disruption.
Vitol, the world’s largest independent oil trader, delivers approximately 15 million metric tons of bunker fuel annually. It is also widening its portfolio as ship operators explore alternatives to conventional marine fuels.
LNG supplies set to expand in Singapore
Liquefied natural gas is becoming a growing part of that strategy. Vitol expects to begin LNG bunker deliveries in Singapore in the coming weeks and is examining opportunities to supply bio-LNG as demand for alternative marine fuels develops.
The company expects to take delivery of an LNG bunkering vessel in November, followed by two more next year.
Singapore’s LNG bunkering market has already recorded strong growth. Sales reached 487,100 metric tons between January and September 2026, an increase of more than 21% from the corresponding period last year, according to data from the Maritime and Port Authority of Singapore.
Gallagher said the expansion had continued despite a difficult operating environment, highlighting the shipping sector’s growing interest in diversifying fuel sources as conventional supplies face mounting geopolitical risks.
