MediumVI Energy Politics & Supply Security16 October 2026, Friday
Ship fuel supply shrinks by 1.8 million tonnes a month
Kieran Gallagher, head of Asia at Vitol, says Gulf supply of high-sulphur fuel oil has fallen by at least 800,000 tonnes a month since February. Attacks on Russian refineries have removed another 1 million tonnes a month. The spot premium has risen from $5.10 on 27 February to around $50 a tonne.
According to a Reuters report carried by Baird Maritime, Gallagher was speaking this week at the SIBCON conference in Singapore. Kpler data show high-sulphur fuel oil exports through Hormuz averaged 3.7 million tonnes a month between January 2025 and February 2026. The shortfall, 2 million tonnes in May, had narrowed to 800,000 tonnes by October. LSEG data put the spot premium for 380-centistoke fuel oil close to $50 a tonne this week. High-sulphur fuel oil is the heavy fuel burned by ships and also fed by refiners into their conversion units.
A Bloomberg report carried by gCaptain says the fuel's price in Singapore has reached its highest since April. In Asia, its value relative to crude hit a seven-month high on 15 October. North Asian refiners will run more than 1 million tonnes of fuel oil as feedstock in November because Saudi crude shipments from the Red Sea have been disrupted, drawing supply away from the bunker market. Gallagher argues that more crude does not automatically mean more fuel oil. The figures are a trading house's estimates, and the 1 million tonne Russian loss could not be independently verified.
Talay assessment
Bottom line
The shortage has moved from crude to the fuel ships themselves burn. Even as crude flows through Hormuz recover, refinery yields and the Russian loss do not close the fuel oil gap, and Asian refiners are competing for the same barrels. The most likely path is a persistently high Singapore premium, with the cost passed through to freight.
Likely effects
- FreightNegativeWeeks
Higher bunker costs pass into container and dry bulk freight through bunker adjustment surcharges.
- Asian refinersNegative1–6 months
North Asian refiners running fuel oil instead of crude compete with ships for the same barrels, entrenching the premium.
- TürkiyeNegative1–6 months
Turkish shipowners and the country's foreign trade absorb rising bunker costs through freight rates.
Possibilities, ranked
- 1Premium stays high55%
Gulf and Russian losses persist and the Singapore premium holds in a $40–60 a tonne band.
Watch: LSEG's 380 cst Singapore spot premium series
- 2Shortfall deepens25%
Fresh strikes on Russian refineries and tanker losses in Hormuz push the shortfall above 2 million tonnes a month.
Watch: Kpler's monthly Gulf fuel oil export data
- 3Substitution brings relief20%
Asian refiners switch back to crude, while exports from Dangote and China cover part of the gap.
Watch: Singapore MPA monthly bunker sales
Probabilities are calibrated judgement based on the sources, not measurement, and are revised as new information arrives. Not investment advice.
Market reaction
Indicators affected
- Fuel oil supply loss (monthly)▼ 1.8mn t
- 380 cst spot premium▲ ≈$50/t