Fuel oil market stays tight as Hormuz and Russian supply losses persist, Vitol says

what happened

Renewed hostilities around the Strait of Hormuz are propping up premiums for high-sulphur fuel oil (HSFO), as supplies stay constrained by lower exports from the Middle East and Russia. Bunker demand remains robust, according to Kieran Gallagher, Vitol's Asia head, who spoke at the Singapore International Bunker conference (SIBCON) this week.

Gallagher said HSFO flows through Hormuz, including Iranian barrels, are still down by at least 800,000 metric tons a month since February. Kpler data showed exports via the strait averaged about 3.7 million tons monthly between January 2025 and February 2026. Spot premiums for 380-cst HSFO were near $50 a ton this week, compared with $5.10 on February 27, LSEG data showed. He estimated that attacks on Russian refineries cut fuel oil output by a further 1 million tons per month.

Some North Asian refiners have switched upgrading units to fuel oil rather than crude, drawing more than 1 million tons of HSFO for November. Vitol, meanwhile, began bunkering at Pakistan's Gwadar Port in July as an alternative to Fujairah and expects to start LNG bunker deliveries in Singapore soon.

why it matters

For the market, the shortage of high-sulphur fuel oil could persist while threats to shipping and oil infrastructure remain high. The low-sulphur segment looks calmer, supported by higher exports from China and Nigeria's Dangote refinery. Rising freight rates and risk premiums also make moving fuel oil out of the Hormuz region more expensive.

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