Fuel Oil Shortage Looms as Refiners Prioritize Diesel: What It Means for Bunker Supply and Prices

A fuel oil Supply shortage is emerging in the global market as refiners prioritize diesel and other higher-value refined products, while geopolitical disruptions continue to interfere with crude supplies, refinery operations and tanker movements.

The projected imbalance is significant. Energy Aspects estimates that the global fuel-oil market could face a 218,000 barrels-per-day deficit in the third quarter of 2026, compared with only about 6,000 bpd a year earlier, according to Reuters’ report on the emerging ship-fuel shortage.

The pressure is particularly important for marine fuel because fuel oil is a major bunker product for commercial shipping and is also used in power generation.

But the current market requires an important distinction.

This is not a case of bunker fuel disappearing from the world’s major ports.

The latest market update indicates that the initial marine-fuel supply squeeze has eased as traders and suppliers have adapted and found alternative sources. However, prices remain substantially above pre-war levels, some blending components remain difficult to secure, and availability is still uneven between major hubs. Reuters’ September 10 update on marine-fuel supply provides the latest picture.

For shipowners, bunker buyers, fuel traders and industrial consumers, the important question is therefore not simply whether there is a shortage.

It is where fuel oil remains available, at what price, in which grade, and how reliably it can be delivered.

What Is Driving the Fuel Oil Supply Shortage? in 2026?

The current fuel oil shortage is being driven by several parts of the petroleum system at the same time.

Geopolitical conflict has disrupted crude production, refinery operations and tanker movements. At the same time, refiners are trying to maximize production of products such as diesel and gasoline, where market margins have been particularly attractive.

That changes the amount of fuel oil produced by the refinery system.

The result is a competition for refinery output:

Diesel demand and margins rise → refiners prioritize middle distillates → less fuel oil is produced → fuel-oil supply tightens → bunker prices rise.

Reuters reports that the projected Q3 fuel-oil deficit is being driven by refinery disruptions linked to the Middle East conflict and attacks on Russian refineries, while refiners are favoring products such as diesel and gasoline. Read the Reuters fuel-oil supply analysis.

Refiners Are Prioritizing Diesel Over Fuel Oil

The economics of refining are central to the current market.

When diesel cracks and other middle-distillate margins rise, refiners have a stronger incentive to configure operations toward those products.

That can reduce the residual fuel available for fuel-oil markets.

The effect becomes more important when refining capacity itself is constrained.

The International Energy Agency’s latest September 2026 Oil Market Report identifies the continuing disruption to global oil supply, refining and petroleum-product markets as a major feature of the current market.

The IEA says the current crisis has particularly exposed refined-product supply chains, with diesel, jet fuel and LPG among the products experiencing elevated prices and tight physical markets. Its analysis also shows how disruptions to Gulf refining and exports are forcing refiners and buyers to adjust trade flows.

Middle East and Russian Refinery Disruptions

The fuel-oil market cannot be separated from the wider disruption to crude and refined-product flows.

Middle Eastern oil infrastructure and shipping routes remain affected by the conflict, while Russian refineries have also been hit by Ukrainian attacks.

That has reduced the amount of refined product reaching international markets through some traditional supply routes.

The IEA has reported that Gulf producers normally play a major role in global refined-product exports, while refinery shutdowns and disrupted export routes have reduced available supply. The IEA’s Middle East and Global Energy Markets analysis provides the broader market context.

Lower Fuel-Oil Exports and Tight Inventories

Fuel-oil inventories at several major hubs have also come under pressure.

Reuters reported that stocks at Singapore, ARA and Fujairah were around 30% below seasonal norms during the period covered by its September 7 analysis.

That matters because large petroleum hubs act as buffers for the physical market.

When stocks are high, traders and bunker suppliers can absorb supply disruptions more easily.

When stocks fall, buyers become more sensitive to refinery outages, shipping delays and cargo availability.

How Tight Is Global Fuel Oil Supply Right Now?

The market is tight, but it is important not to confuse a market deficit with an absolute physical shortage at every port.

The original Reuters report identified a projected 218,000 bpd Q3 deficit, indicating that global demand could exceed available fuel-oil supply.

However, the situation has evolved.

On September 10, Reuters reported that the marine-fuel squeeze had eased from the severe levels seen in March and April as the market adapted and alternative supply sources emerged.

Singapore’s bunker operations were described as relatively steady, while Fujairah’s fuel activity remained much lower than pre-war levels. See Reuters’ latest marine-fuel supply update.

This distinction is important for buyers.

A buyer may still be able to secure fuel oil, but the transaction may involve:

• Higher pricing
• Longer lead times
• Fewer supplier options
• More expensive blending components
• Alternative loading locations
• Different delivery schedules
• Higher shipping costs

In other words, availability has not disappeared, but procurement has become more sensitive to timing and location.

Why Fuel Oil Prices and Bunker Costs Are Rising

The effect of tighter supply is already visible in marine-fuel pricing.

Reuters reported that Singapore VLSFO prices had risen roughly 76% since the beginning of the Iran war, significantly more than the increase in Brent crude over the same period.

That divergence is important.

It shows that the market is not simply responding to higher crude prices.

The refined-product market itself is experiencing additional supply pressure.

Higher bunker prices increase the operating cost of ships.

For vessels making long voyages, fuel can represent a significant part of total voyage economics. When bunker prices rise sharply, shipping companies may face pressure to increase freight rates or fuel surcharges.

That can eventually affect the cost of moving commodities, petroleum products, manufactured goods and other cargoes around the world.

What the Latest Fuel Oil Market Data Shows

Several current indicators illustrate how quickly the physical market is changing.

Singapore

Singapore remains the most important global bunker hub and is particularly exposed to changes in Middle Eastern supply.

Reuters reported that Singapore VLSFO prices had increased more than 60% above pre-war levels in its September 10 update, although prices had fallen from their March peak.

The latest Reuters assessment also indicates that Singapore’s physical marine-fuel operations have remained relatively stable despite continuing regional disruptions.

That means Singapore is not simply a shortage story.

It is a story about higher cost, changing supply sources and continued sensitivity to disruption.

Fujairah

Fujairah is another critical petroleum and marine-fuel hub, particularly for ships operating between the Middle East, Asia, Africa and Europe.

The latest data shows why buyers should not rely on a single inventory number.

ENGINE reported that Fujairah fuel-oil inventories reached their highest level since March, with first-week-of-September stocks averaging 43% above the August level.

That is a major improvement from the previous month.

However, it does not automatically mean that every fuel grade is freely available.

Earlier August data showed Fujairah fuel-oil inventories averaging 29% below July levels, according to ENGINE’s Fujairah inventory report.

The two data points demonstrate how quickly the physical market is moving.

For buyers, the question is not simply:

“Are Fujairah inventories rising?”

It is:

“Is the specific grade, quantity and delivery window I require available?”

ARA and Rotterdam

The Amsterdam-Rotterdam-Antwerp region is another important fuel-oil and marine-fuel market.

Reuters included ARA alongside Singapore and Fujairah when reporting fuel-oil inventories approximately 30% below seasonal norms.

This means European buyers are also exposed to changes in refinery production, imports, shipping routes and regional bunker demand.

Is There Actually a Global Bunker Fuel Shortage?

The short answer is:

There is significant fuel-oil market tightness, but not a universal physical shortage of bunker fuel.

This distinction is becoming increasingly important.

The original news story highlighted a projected global fuel-oil deficit.

The latest market update shows that suppliers and traders have adapted by finding alternative sources and adjusting flows.

Reuters reported that around 10 to 15 oil transits per day were still moving through the Omani corridor, while alternative supply routes were helping the marine-fuel market adapt.

However, the market remains vulnerable because certain blending components are difficult to secure and replacement barrels can be expensive.

So the more accurate description is:

tight supply + elevated prices + uneven availability + continued disruption risk.

That is a much more useful description for a commercial buyer than simply saying “bunker fuel is running out.”

What the Fuel Oil Shortage Means for Shipping Costs

The relationship between fuel oil and shipping is direct.

When bunker prices increase, vessel operating costs increase.

The impact can move through several stages:

Fuel-oil supply tightens

↓

Bunker prices increase

↓

Voyage fuel costs increase

↓

Shipping margins come under pressure

↓

Freight rates or fuel surcharges may increase

↓

Commodity and logistics costs face upward pressure

This is why a fuel-oil story can become a broader global-trade story.

Higher marine-fuel costs can affect the economics of transporting crude oil, refined products, agricultural commodities, metals, manufactured goods and other cargoes.

The effect will vary by vessel, route, fuel grade, charter structure and commercial contract.

Which Markets Are Most Exposed?

Asia

Asia is arguably the most exposed region because of its dependence on Middle Eastern oil flows and the importance of Singapore as the world’s largest bunker hub.

The region is therefore sensitive to disruptions in Gulf crude and refined-product exports.

Middle East

The Middle East has major refining and storage infrastructure, but it is also at the center of the geopolitical disruption affecting crude and product flows.

Fujairah’s importance makes the region especially relevant to marine-fuel buyers.

Europe

European markets remain exposed through ARA inventories, imports and changing refinery economics.

Any prolonged reduction in Russian refined-product availability can increase Europe’s dependence on alternative sources.

Global Shipping

The impact extends beyond the producing regions.

A vessel may have physical access to bunker fuel but still face significantly higher costs because replacement barrels are more expensive.

That is the key commercial implication.

What the Fuel Oil Shortage Means for Bulk Buyers

For a bulk buyer, the current market makes procurement timing and physical availability more important.

A buyer looking for fuel oil should not evaluate a supplier solely on the headline price.

The buyer should establish:

• Product grade
• Sulfur specification
• Required volume
• Loading location
• Delivery location
• Delivery window
• FOB, CIF or other delivery structure
• Storage requirements
• Inspection requirements
• Vessel compatibility where applicable
• Available cargo size
• Lead time
• Current market reference

This is particularly important because an attractive indicative price does not necessarily mean that the required cargo is immediately deliverable.

In a tight market, the ability to match the right product with the right hub and delivery window can be as important as the headline price.

For buyers evaluating structured petroleum procurement, the current market reinforces the importance of checking supply origin, logistics, storage and delivery terms alongside price.

Why Fuel Oil Availability Can Change Quickly

Fuel-oil availability can change rapidly because it sits within a refinery system that is also producing diesel, gasoline and other products.

A refinery deciding to maximize diesel output can alter the amount of residual fuel available.

A refinery outage can remove multiple products from the market simultaneously.

A tanker disruption can prevent otherwise available cargo from reaching a major bunker hub.

And a change in blending-component availability can affect whether a bunker supplier can produce the required specification.

This means that regional supply intelligence matters.

A buyer that monitors only one port may miss improving availability in another hub.

Conversely, a buyer may see rising inventory at a major terminal while the specific fuel grade required remains constrained.

What Buyers Should Watch Next

The next developments in the fuel-oil market will depend on several variables.

Refinery Runs

Watch whether refiners continue prioritizing diesel and other middle distillates.

If diesel margins remain exceptionally high, fuel-oil production could remain under pressure.

Middle Eastern Exports

The return or further disruption of Gulf crude and refined-product flows will remain one of the most important variables.

The IEA continues to identify the normalization of Gulf flows as a major factor for global energy-market stability. See the latest IEA oil-market analysis.

Russian Refinery Operations

Further attacks or prolonged outages at Russian refineries could reduce refined-product exports and increase competition for replacement supply.

Singapore and Fujairah Inventories

These two hubs should remain important indicators for marine-fuel buyers.

Rising inventories can improve physical flexibility, but buyers should still examine individual grades and delivery windows.

Bunker Prices

A continued divergence between crude prices and marine-fuel prices would indicate that refined-product tightness remains an important part of the market.

Shipping Routes

Any further disruption around the Strait of Hormuz or Red Sea could quickly alter bunker supply, freight costs and regional availability.

The latest regional developments are still highly fluid. Reuters reported on September 13 that attacks had further threatened Gulf and Red Sea shipping and that a Saudi pipeline carrying around 4 million barrels per day had been shut following drone attacks. Read the latest Reuters report on the Saudi pipeline disruption.

That development is primarily a crude-supply issue rather than a direct 4-million-bpd fuel-oil loss, but prolonged disruption could add another layer of pressure to the already stressed petroleum-product market.

What This Means for Petroleum Buyers

The current fuel oil shortage story is ultimately a story about refinery economics, physical supply and logistics.

The market is not simply running out of fuel oil.

Instead, several pressures are interacting:

Refinery disruptions

→ Less available processing capacity

→ Refiners prioritize diesel and higher-value products

→ Fuel-oil production and exports tighten

→ Bunker prices rise

→ Shipping costs increase

→ Buyers compete for reliable physical supply

That is why petroleum buyers should look beyond a single headline price.

The relevant questions are:

Where is the required grade available?

What volume can actually be supplied?

What is the loading location?

What is the delivery window?

Can storage and logistics be arranged?

Is the transaction structured on workable FOB, CIF or other delivery terms?

For buyers currently evaluating fuel-oil supply opportunities, GPA can review defined commercial requirements and assess potential supply, origin, delivery and procurement structures.

Explore fuel oil supply opportunities through GPA’s Live Petroleum Marketplace or submit a defined petroleum procurement requirement for review.

Market information is indicative and subject to change. Product availability, pricing, allocation, origin, delivery terms and transaction structures are subject to supplier confirmation, due diligence and transaction-specific conditions.