What happens when ships need more fuel than refiners could supply?

The war is creating another bottleneck for global shipping: the fuel that ships actually run on. Global fuel-oil supply is heading for a deficit of around 218k bbl / d in 3Q 2026, as refinery disruptions collide with refiners prioritizing diesel, jet fuel, and gasoline at fuel oil’s expense. The projected deficit compares with just 6k bbl / d in the same quarter last year, Reuters reports.

Fuel oil is the odd one out at the refinery: Damage and outages have reduced overall processing capacity just as gasoline and diesel inventories have tightened. Refiners that can upgrade heavier fuel oil into more valuable products therefore have every incentive to run those barrels through secondary units rather than sell them into the bunker market.

The supply squeeze is showing up in inventories. Fuel oil stocks across Singapore, Fujairah, and Amsterdam-Rotterdam-Antwerp are around 30% below their three-year seasonal averages. That matters because shipping is already consuming more fuel as vessels take longer routes, while operators are also having to adjust where and when they bunker.

Bunker prices are outrunning crude: Singapore’s very low sulphur fuel oil — the main shipping fuel — had climbed 76% since the war began to just under USD 825 per ton as of 1 September. Brent rose around 40% over the same period, meaning marine fuel has become considerably more expensive than the underlying crude move.

IN CONTEXT- That detour can be enormous. In July, rerouting Saudi crude from Yanbu to Taiwan via the Cape of Good Hope instead of the normal route could stretch the journey to 48 days from 19 days, with estimated fuel costs rising to USD 2.9 mn from around USD 1.3 mn.

Why this matters: Shipping is already paying for longer voyages, higher ins. premiums, and disrupted trade lanes — all of which raise operating costs. A tighter bunker market adds another layer, creating the risk that higher fuel costs feed through into freight rates.

SOUND SMART- Who actually carries that bill depends on the contract. Under a conventional time charter, the charterer generally provides and pays for the fuel consumed by the ship, Bimco reports. Under a voyage charter, the shipowner typically pays for the fuel and builds the estimated cost into the freight charged for carrying the cargo.

The regional supply picture is tightening: Regional fuel-oil exports averaged around 447k bbl / d between March and August — 45% below the same period last year. Kuwait’s Al-Zour refinery, historically a major fuel-oil supplier, has shipped only one fuel-oil cargo since March, compared with exports of roughly 191k bbl / d during January-February.

Russia is also tightening the market from the other side: Ukrainian attacks on refining capacity pushed Russian fuel-oil exports to a record low of 591k bbl / d in August, versus more than 860k bbl / d last year. With Middle Eastern supply under pressure, the squeeze is landing hardest in Asia — particularly Singapore, the world’s largest bunkering hub, which imports more than half of the roughly 1 mn bbl / d it needs.