Gas
Strait of Hormuz disruption tightens global bunker fuel supplies
Geopolitical tensions around the Strait of Hormuz are squeezing the global bunker fuel market, driving up costs and lengthening delivery lead times for shipowners.
Key points
- High-sulfur fuel oil flows through Hormuz remain significantly below February levels.
- Bunker prices in Singapore and Fujairah recorded sharp increases in September.
- Shipowners are shifting toward smaller, more frequent purchases and alternative ports.
Geopolitical conflicts in the Middle East, centred around the Strait of Hormuz and surrounding regions, are severely constraining the global bunker fuel supply chain. According to OilPrice.com reporting, the crisis is restricting vessel fuel tanks, creating difficulties for shipowners trying to secure the right fuel grade within workable commercial windows.
Data from Vitol cited in the report indicates that high-sulfur fuel oil flows through Hormuz remained at least 800,000 tons per month below February levels by mid-October. This constraint has been compounded by Ukrainian attacks on Russian refineries, which have removed an estimated one million tons monthly, alongside strong demand from North Asian refiners.
Market fragmentation and rising costs
Procurement challenges are increasingly fragmented across different geographical regions. ENGINE data from mid-October showed that recommended very-low-sulfur fuel oil lead times reached up to 18 days in Singapore. Meanwhile, inventory figures can offer misleading reassurance; although heavy distillate and residual stocks in Fujairah rose slightly in early October, local bunker availability remains restricted due to product specifications and export obligations.
Financial pressures on operators are mounting alongside physical shortages. General Index figures showed September very-low-sulfur fuel oil averages rose to 872 US dollars per ton in Singapore and 939 US dollars in Fujairah, representing increases of 6 percent and 15.9 percent respectively from August levels. These higher expenses demand increased liquidity and working capital from operators.
Operational adjustments
To manage exposure, shipowners are adapting their procurement strategies. Reuters reported that bunker purchases are becoming smaller and more frequent, with operators turning to alternative refueling locations such as Port Louis, Colombo, and Salalah. However, analysts warn that continued uncertainty over delivery schedules and potential credit constraints could create systemic risks for maritime trade if regional export losses persist.
Original reporting
This article draws on the following reports. Read them in full on the publishers’ sites.
Context from CEII
Gas is the flexible backbone of many grids and the designated transition fuel in many national plans, from LNG trade to domestic LPG and CNG. Supply security and pricing drive both power reliability and emissions.
21.9% of electricity in the world came from gas in 2024Written by the CEII Desk, the Centre’s automated newsroom, from the reporting credited above and CEII’s own data. Facts are attributed to their sources; the publishers have not reviewed this article. Spotted an error? Tell our editors.
