Shippers flag ship fuel shortage

Lordnewss’ September 7 X post was pointing to a Reuters analysis, not announcing a new shipping advisory. Reuters reported on September 7 that a shortage of fuel oil used by ships and power plants is looming in the third quarter as wars disrupt refinery output and tanker traffic, while refiners shift toward diesel, gasoline and jet fuel. Energy Aspects estimated the global fuel-oil market would run a deficit of 218,000 barrels per day in the third quarter of 2026, according to the Reuters report carried by multiple outlets. Reuters said that would be the first shortfall in its forecast since the third quarter of 2025, when the gap was about 6,000 barrels per day. ### What exactly is running short? (sa.marketscreener.com) Fuel oil is the heavy refinery product that underpins much of the bunker market, including very low sulphur fuel oil, or VLSFO, the main fuel used by most large ocean-going ships. Reuters said the shortage risk applies to fuel oil used by ships and power plants, with shipping exposed through tighter bunker supply. (indexbox.io) Singapore is the key market to watch because it is the world’s largest bunker hub. Reuters, citing Kpler data, said Singapore imports more than half of its fuel-oil needs, which total nearly 1 million barrels per day. ### Why are refiners making less of it? Reuters said refiners under pressure from war-related disruptions are favoring higher-value products such as diesel, gasoline and jet fuel over fuel oil. (sa.marketscreener.com) That matters because fuel oil is often a residual output from refining, and tighter refining systems can reduce the amount left for bunker markets. (idnfinancials.com) Rystad Energy analyst Valerie Panopio told Reuters that “due to the protracted supply disruption in the Middle East, we expect fuel oil supply to remain critically tight in the third quarter.” That is the named-source view behind much of the market concern. ### Which wars and disruptions are feeding the squeeze? Kpler said Middle Eastern refinery runs were about 7.3 million barrels per day, down from 9.9 million barrels per day in February 2026, reflecting refinery damage and evacuation constraints through the Strait of Hormuz. (sa.marketscreener.com) Kpler said a return to pre-war throughput is unlikely before the second quarter of 2027. (dawn.com) Russia is also part of the supply problem. Reuters, citing Kpler data, said Ukrainian drone attacks affected Russian refinery operations and pushed Russia’s fuel-oil exports down to 591,000 barrels per day in August, versus an average above 860,000 barrels per day in 2025. Longer voyages are adding demand pressure at the same time. (kpler.com) Reuters said ships rerouting to avoid Houthi threats in the Red Sea have increased fuel consumption, tightening the market further. ### Why are prices moving faster than crude? Singapore VLSFO prices reached just under $825 per metric ton on September 1, according to Reuters-cited ZeroNorth data summarized by several outlets. (profit.pakistantoday.com.pk) Reuters said that was up 76% since the Iran war began, compared with about a 40% rise in Brent crude over the same period. That spread matters because it shows the stress is concentrated in refined products, not just in crude oil. (jawawa.id) Reuters linked the move to higher operating costs for shipping companies and the risk of higher sea-freight rates. ### Who gets hit first? Asia is expected to be hit hardest because it relies heavily on Gulf fuel-oil flows disrupted by the Iran war, according to Reuters. (idnfinancials.com) Singapore, Fujairah and the Amsterdam-Rotterdam-Antwerp hub are the main pricing centers traders are watching for signs of further tightening. The next checkpoints are market data rather than a single policy decision. Traders will be watching third-quarter deficit estimates from Energy Aspects, refinery-run updates from Kpler, and bunker-price moves in Singapore after the September 1 VLSFO reading near $825 a ton. (idnfinancials.com) (indexbox.io) (dawn.com)