Global Marine Fuel Shortage Triggers 76% Price Spike Amid Geopolitical Conflicts
A global shortage of heavy marine fuel has triggered a 76% price surge in Singapore to $130 per barrel. Geopolitical conflicts and drone strikes on refineries have severely disrupted supply chains, driving up shipping costs.
The ongoing conflicts involving Iran, Russia, and Ukraine have severely disrupted oil refining and transportation supply chains, triggering a critical global shortage of heavy fuel oil used by ships and power plants. According to a report by Reuters, as supply shrinks, global refiners are prioritizing the production of diesel and other high-margin fuels over heavy fuel oil.
While crude oil prices have recorded relatively moderate increases in recent months, the prices of refined petroleum products have surged. This spike is driven by drone strikes on Russian refineries, geopolitical tensions in the Middle East, and severe shipping restrictions in the Strait of Hormuz and the Red Sea.
Skyrocketing Fuel Costs and Supply Deficits
According to data from the marine refueling platform ZeroNorth, the price of Very Low Sulfur Fuel Oil (VLSFO), the primary marine fuel, has skyrocketed by 76% since the start of the Iranian conflict, reaching $130 per barrel in Singapore. This increase significantly outpaces the 40% rise in Brent crude oil, which traded at approximately $93 per barrel during the same period.
At the same time, China has reduced its refining output and exports to conserve domestic inventories. Meanwhile, Russia's oil exports plunged in August to a low of 591,000 barrels per day, compared to an average of over 865,000 barrels per day in 2025, following Ukrainian drone attacks on its refining infrastructure. Marine fuel exports from the Middle East also dropped by 45% compared to last year, averaging 447,000 barrels per day between March and August.
Global Economic Fallout and Shipping Delays
This shrinking supply is expected to drive up costs for shipowners and power generation companies already struggling with wartime disruptions. Higher marine fuel costs will almost certainly translate into increased global shipping rates. Asia is projected to bear the brunt of this crisis due to its heavy reliance on imports from the Persian Gulf.
Singapore, the world's largest marine refueling hub, imports more than half of its daily demand of nearly one million barrels from the Middle East, according to data from Kpler. The consulting firm Energy Aspects estimates that the global deficit of heavy fuel oil will reach 218,000 barrels per day in the third quarter of 2026. This marks the first major global deficit since the third quarter of 2025, which saw a minor deficit of just 6,000 barrels per day. Rystad Energy published a matching forecast.
Valeria Penopolo, an analyst at Rystad Energy, stated:
"Due to the extensive supply disruptions in the Middle East, we estimate that marine fuel supply will remain exceptionally tight throughout the third quarter."
Marine fuel shortages join ongoing deficits in diesel and jet fuel, which have struggled to meet demand over the past six months. US diesel prices surged to record highs last Friday amid renewed escalations between the United States and Iran. Compounding the crisis, marine fuel demand has risen as commercial vessels are forced to take longer shipping routes to bypass the Bab al-Mandab Strait in the Red Sea to avoid attacks by Houthi rebels.
