Iran War Disrupts Strait of Hormuz Fuel Oil Supply

The ongoing Iran war has severely disrupted fuel oil shipments through the Strait of Hormuz, a critical chokepoint for global supply, leading to a 90% reduction in tanker transits. This has caused a significant shortage of fuel oil, particularly high-sulphur fuel oil, in Asian markets. As a result, prices for high-sulphur bunker fuel in Singapore, the world's largest ship refuelling hub, have surged by over 40%, and low-sulphur fuel oil prices have climbed by more than 30%. Traders are struggling to find alternative supplies from Western refineries, the United States, Mexico, Venezuela, and Russia due to high tanker rates, insufficient volumes, or existing sanctions. The crude oil shortage caused by the Middle East war is also leading regional Asian refiners to cut production, further tightening supply. This situation is expected to lead to sharply drawing stockpiles in Singapore in the coming weeks, increasing costs for shipping companies and ultimately impacting consumer prices for goods.