Why Ship Fuel Is Running Short—and What It Means for Global Trade

Introduction: A Hidden Crisis in Maritime Trade

When we think about global trade, we often focus on the goods themselves—electronics, textiles, foodstuffs, raw materials. But there's a critical undercurrent that keeps all of this moving: fuel. Specifically, the heavy fuel oil (HFO) that powers ships across oceans and seas. In recent months, however, a quiet but consequential shortage has emerged, driven by war, geopolitics, and market economics.

As I've reported on for years, when disruptions in supply chains hit at their foundational level, the impact ripples outward—sometimes subtly, sometimes dramatically. Right now, that's happening with ship fuel.

Why it matters: Shipping accounts for over 90% of global trade by volume. If that system begins to fail, it's not just ports or freight companies that suffer—it's every consumer, manufacturer, and economy reliant on imported goods.

Understanding Ship Fuel: The Lifeblood of the Ocean Economy

The fuel used by ships is typically heavy fuel oil (HFO), commonly referred to as bunker fuel. It's a residual product from the refining process of crude oil, and it's ideal for large vessels because of its low cost and high energy density.

• Marine gas oil (MGO): Used by smaller vessels or for auxiliary power
• Marine diesel oil (MDO): Similar to HFO but cleaner-burning
• Very low sulphur fuel oil (VLSFO): A more environmentally compliant option

But the real story is about how much of each kind is being produced and where it's going. And that, in turn, has become a point of contention.

Why Ship Fuel Is Running Low

Several key factors have combined to create a supply crunch:

1. War Disruptions: Conflicts in West Asia and Europe have severely limited access to oil from major producing regions. The U.S.-Iran conflict alone has reduced Middle Eastern fuel exports by nearly half since early 2026.
2. Russia-Ukraine Conflict: Ukrainian attacks on Russian refineries have also curtailed fuel output. In August, Russia's fuel oil exports dropped to their lowest levels in nearly a decade.
3. Refiner Prioritization: Refineries, faced with the same raw material, are choosing to produce more profitable products like diesel and petrol instead of fuel oil. This shift has left less available for ships.

According to Kpler, a global energy trade analytics firm, this shortfall is estimated at around 218,000 barrels per day in Q3 2026—the first significant deficit since 2025.

The Geopolitical Toll on Fuel Supplies

It's not just about production—it's about transit. The Strait of Hormuz and the Bab al-Mandeb Strait are among the world's busiest shipping lanes, yet they've become chokepoints due to conflict. Iran has attacked oil facilities, while Yemen's Houthis have disrupted shipments in the Red Sea.

Royston Huan, an oil products analyst at Energy Aspects, noted a 400,000-barrel drop in ship fuel sales since last April—a loss equivalent to all of China's bunker fuel purchases in a year. That kind of volume isn't easily replaced.

What's at stake: A significant portion of global trade passes through these regions, and any disruption affects supply chains from electronics to pharmaceuticals.

Refiners Are Choosing Profit Over Power

Crude oil is a finite resource. Once refined, it becomes multiple products—some more profitable than others. In today's market, diesel margins are especially high. That incentivizes refiners to convert the heavier residual fuel (which becomes HFO) into higher-value products like diesel or petrol.

Sunil Reddy, a commodities market observer, pointed out that "extremely strong diesel margins effectively start pulling barrels away from the bunker-fuel market."

That's why even as crude is available, less fuel oil is produced—because it doesn't make economic sense to prioritize.

Regional Impact: Asia and Beyond

Asia, which depends heavily on Gulf oil, will feel the brunt of this shortage. Singapore, the world's largest bunker fuel hub, imports more than half of its required fuel oil from overseas. Prices have surged by 76% since the war began.

Similar shortages are occurring in Amsterdam-Rotterdam-Antwerp (Netherlands) and Fujairah (UAE), with fuel stock levels now 30% below seasonal averages.

These dips don't just affect shipping companies—they affect the entire global logistics ecosystem. When fuel prices rise, so do shipping costs, which eventually get passed on to consumers.

The Bigger Picture: Trade, Costs, and Globalization

Huan from Energy Aspects emphasized that ship fuels are a major cost factor in maritime transport. "The end user usually ends up bearing these higher costs, not so much the vessel owner," he noted.

Capital Economics' Hamad Hussain echoed that sentiment: "Given the lack of spare refining capacity globally, prices are likely to remain high until there is a resolution to the conflict in the Middle East."

The global economy depends on a web of interconnected supply chains. When one node fails, whether it's fuel, labor, or capital, the consequences extend far beyond that point.

What Comes Next?

While this shortage is currently ongoing, there are some potential mitigating factors:

• Alternative fuels: Some shipping lines are beginning to explore cleaner, low-sulfur options like VLSFO.
• New refinery investments: Several countries are planning or investing in new refining capacity to meet growing demand.
• Geopolitical stability: A resolution to the current conflicts could restore normal supply routes and export flows.

However, for now, the impact is clear. As the world grapples with energy security amid ongoing regional instability, we're seeing how deeply these tensions can penetrate into everyday commerce—especially when it comes to something as essential as ship fuel.

Conclusion: The Cost of a Global System

As I've seen throughout my career, the most important stories aren't always those with the loudest headlines. They're often about systems that silently hold everything together. The shortage in ship fuel is not just a problem for shipping companies or oil refiners—it's a wake-up call for all of us who depend on global trade to function.

And until we can secure more stable and resilient energy infrastructure, the price of that system may only go higher.