Singapore – Web Desk Fuel oil traders across Asia are scrambling to secure alternative supplies after shipments from key Middle Eastern producers dropped sharply due to the ongoing conflict involving Iran, industry sources said.
Disruptions in tanker traffic through the Strait of Hormuz—one of the world’s most important energy chokepoints—have significantly reduced fuel oil exports to Asian markets, forcing traders to seek replacement cargoes from Western suppliers.
The supply squeeze is expected to impact the availability of bunker fuel used to power ships, particularly at major refuelling hubs such as Singapore, the world’s largest maritime bunkering port. Rising bunker fuel prices could increase operational costs for shipping companies and eventually push up global freight and goods transport prices.
Market data from Kpler shows that fuel oil shipments passing through the Strait of Hormuz to Asia typically average around 1.2 million metric tons per month—about 246,000 barrels per day—with roughly 70% of those volumes destined for Southeast Asian markets.
However, recent vessel tracking indicates tanker transits have dropped nearly 90% compared with the previous week, tightening supply conditions in the region.
Analysts say the disruption has triggered a rally in fuel oil markets, especially for high-sulphur fuel oil (HSFO), which is widely produced in the Middle East.
According to traders, prices for high-sulphur bunker fuel delivered in Singapore have surged more than 40% since the start of the conflict, while low-sulphur fuel oil prices have climbed over 30%.
Industry participants say some replacement supply could come from Western refineries in the United States and Mexico, though extremely high tanker freight rates are making shipments to Asia economically challenging.
Other potential suppliers include Venezuela and Russia, but trade restrictions linked to sanctions and geopolitical tensions limit availability for many buyers.
Meanwhile, fuel oil shipments from Iran—already restricted by sanctions—have also halted due to the conflict, further tightening regional supply.
Energy consultancy FGE NexantECA noted that reduced Iranian supply could force Chinese refiners to draw more fuel oil from Russia, potentially limiting availability in major Asian trading hubs.
Although Singapore currently holds relatively high stockpiles of fuel oil in onshore tanks and floating storage, traders warn that inventories could decline rapidly in the coming weeks if supply disruptions persist.
