As the war disrupts both crude oil processing and tanker shipping, refineries are increasingly under pressure, forced to prioritize diesel and other products, and fuel oil supplies for ships and power plants are facing a shortage risk in the third quarter. Fuel oil inventory levels and prices already reflect this pressure. Data compiled by Reuters shows that fuel oil inventories at the three major hubs of Singapore, Amsterdam-Rotterdam-Antwerp, and Fujairah are about 30% below their three-year seasonal average. Rystad energy analyst Valerie Panopio points out that the Houthi threat has also increased demand, with ships taking longer routes to avoid key oil chokepoints like the Bab el-Mandeb Strait or the entire Red Sea. Data from the marine fuel pricing platform ZeroNorth shows that as of September 1, the price of Singapore's main marine fuel (very low sulfur fuel oil) has risen 76% since the start of the war with Iran, to nearly $825 per tonne (about $130 per barrel). This increase exceeds the 40% increase in the Brent crude benchmark price during the same period. Consulting firm Energy Aspects predicts a deficit of 218,000 barrels per day in the third quarter, the first time the firm has estimated a shortage since the third quarter of 2025, when the deficit was only 6,000 barrels per day. Rystad energy analyst Valerie Panopio stated that fuel oil supplies are expected to remain extremely tight in the third quarter due to ongoing supply disruptions in the Middle East.
