Asia is grappling with significant fuel oil shortages as shipments from key Middle Eastern suppliers through the Strait of Hormuz decline sharply, according to market sources. The Iran war has disrupted tanker transits in the region, compelling traders to explore alternative cargoes from Western refineries despite high logistical costs.
The shortage has already sent bunker fuel prices soaring. At Singapore, one of the world’s largest ship refuelling hubs, high-sulphur fuel oil prices have surged over 40% since the start of the conflict, while low-sulphur fuel oil prices have climbed more than 30%. The price increases are expected to ripple through global shipping costs, ultimately affecting companies transporting goods across major trade routes.
Typically, Asia receives around 70% of Middle Eastern fuel oil exports, with approximately 246,000 barrels per day transiting the Strait of Hormuz. Overall fuel oil exports through the passage usually total about 3.7 million tons per month. According to vessel activity data analyzed by Kpler, tanker transits are currently down roughly 90% compared to last week, intensifying supply pressure in the region.
“The global high-sulphur complex relies heavily on a single chokepoint. Even partial disruptions quickly tighten supply balances and amplify bunker market volatility,” said Sumit Ritolia, lead analyst for refining and supply modeling at Kpler.
The disruption has forced traders to consider Western sources for high-sulphur fuel oil, though skyrocketing tanker rates make such shipments economically challenging. In Singapore, traders report difficulties securing fuel for the latter half of March, with limited arbitrage options due to restricted maritime routes.
In the low-sulphur segment, some supply continues to reach Asia from Brazil and Nigeria. However, cargoes from key Gulf refineries, such as Kuwait’s al-Zour facility, have been halted, adding further strain on markets. Traders warn that costs for future replenishments will likely rise as tight supply conditions persist.
While current inventories, including onshore stockpiles in Singapore and fuel stored on ships, provide some short-term relief, analysts expect these reserves to deplete rapidly in the coming weeks if disruptions continue.
The broader geopolitical situation remains a driving factor. The United States and Israel launched strikes against Iran last week, killing the Islamic Republic’s Supreme Leader, Ayatollah Ali Khamenei, which triggered retaliatory missile and drone attacks across Gulf states allied with Washington. While most strikes were intercepted, some infrastructure, residential areas, and military facilities have sustained damage, further complicating shipping operations.
The ongoing conflict highlights the vulnerability of global fuel supply chains to geopolitical shocks. For Asian economies, the combination of limited Middle Eastern exports, high tanker costs, and the need to secure alternative supplies underscores the fragility of energy logistics. Companies dependent on bunker fuel for shipping operations face rising costs and tighter market conditions, while the broader trade ecosystem braces for continued volatility.
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