A shortage of fuel oil used in ships and power plants looms in the third quarter as refiners, increasingly squeezed by wars that have disrupted both crude processing and tanker traffic, prioritise output of diesel and other products at its expense.
While crude oil avoided major price spikes in recent months, refined product prices have soared as strikes damage refineries in Russia and the Middle East and curbs on ship traffic choke flows. China has also cut refining capacity and exports to avoid burning stocks.
Tightening supply threatens to further raise costs for shipowners and power generators already dealing with war-related disruptions. Higher bunker fuel costs could also in turn feed into shipping rates.
Asia will be hardest-hit, as it is most reliant on Gulf flows disrupted by the Iran war, with Singapore, the world’s largest bunker hub, importing more than half of its nearly 1 million barrels a day of demand, according to import data from Kpler. Consultancy Rystad has a similar outlook.
A drone view of oil tanks in Braintree, Massachusetts, the US on March 18, 2026. — Reuters/File
