Global Fuel Shortage: Wars and Profit Margins Squeeze Ship and Diesel Supplies

Key points

• Middle East fuel oil exports dropped 45% year-on-year, averaging 447,000 barrels per day from March to August, according to Kpler.
• Energy Aspects estimates a fuel oil market deficit of 218,000 barrels per day in the third quarter, the first significant shortfall since late 2025.
• Russia’s fuel oil exports hit a record low of 591,000 barrels per day in August, down from an average of over 860,000 barrels per day in 2025, due to Ukrainian drone strikes on refineries.
• In Singapore, the price of very low sulphur fuel oil rose 76% since the start of the Iran conflict, reaching nearly $825 per metric tonne.
• Vitol CEO Russell Hardy noted a missing supply of 2 million barrels per day from Russia and nearly 2 million barrels per day from the Middle East.
• US diesel prices recently topped $5.90 per gallon, prompting governments to implement emergency fuel tax cuts.

Background

This crisis follows a period of escalating tensions in the Middle East and Europe, including US military deployments in the region and ongoing support for Ukraine. Earlier warnings about interconnected global conflicts have materialized into simultaneous supply shocks in multiple energy hubs.

How outlets are covering it

Al Jazeera emphasizes the impact on maritime logistics, noting that the supply loss is comparable to all of China’s bunker sales volume. OilPrice.com focuses on the diesel crunch, highlighting that global inventories are at historic lows with no immediate replenishment. The EIA notes that elevated crack spreads and crude prices are contributing to higher pump prices, reflecting the broader economic pressure on consumers.

Why it matters

The shortage threatens global supply chains, as rising fuel costs are passed to end-users. Without spare refining capacity, prices are likely to remain high until conflicts resolve, potentially stalling trade that no longer makes economic sense.

What to watch

Analysts expect the diesel and fuel oil shortage to persist through the winter, with continued pressure on global inventories. Governments may continue emergency relief measures, while refiners will likely maintain prioritization of high-margin products like diesel over heavy fuel oil.