Fuel oil: Artillery fire is sentiment; inventory is fact.

This lays bare fuel oil’s biggest current dilemma. On one side lies the tangible, hard-hitting supply threat—ships under attack, cargoes shrinking, inventories draining; on the other, politicians’ ‘verbal interventions’—calls for ceasefires, releases from strategic reserves, and easing of sanctions—each louder than the last. Whose voice should fuel oil prices heed? The answer is actually quite simple: listen to inventories, not to mouths. The geopolitical risk premium has two parts: half is real—the physical cargo truly is dwindling; half is emotional—the ‘war in investors’ minds.’ Politicians’ pronouncements are, nine times out of ten, mere bluster—mere posturing at best. What the market ultimately recognizes is not who shouts loudest, but how much cargo remains in warehouses, how many shipments are scheduled on vessel timetables, and how much buyers and sellers are actually paying in real transactions. Shells can temporarily blast prices upward—but prices must ultimately be weighed against actual physical cargo. First, consider the ‘genuine tightness’—this part is backed by hard evidence. Singapore’s fuel oil inventories have declined for six consecutive weeks, reaching their lowest level in nine weeks; near-month cargoes trade at a premium over far-month ones, and crack spreads are rising—these two signals, translated plainly, mean: spot supplies are tight, and buyers are willing to pay more for cargo they need immediately. Low inventories and tight spot markets constitute fuel oil’s hardest, most fundamental floor right now. On the U.S. side, a ‘natural disaster’ is further disrupting supply. Category-3 Hurricane Isaias made landfall in the Gulf of Mexico, prompting local oil producers to suspend over one million barrels per day of crude output—more than 70% of the region’s total production—and evacuate personnel from offshore platforms. As the hurricane struck, U.S. crude inventories plunged by several million barrels within a week, while refinery utilization remained stubbornly high. Nature’s calamity layered atop human-made crisis is steadily eroding global supply buffers. Looking at the supply side, matters grow even more alarming. The two largest exporters of fuel oil—especially high-sulfur fuel oil—are the Middle East and Russia. Today, one is under fire, the other self-sabotaging. Saudi Arabia’s exports plummeted from over 800,000 tons per month to just 50,000 tons—nearly zero—not because it lacks willingness to sell, but because Houthi militants are relentlessly attacking its ports and infrastructure, making cargo shipments impossible. Russia’s situation is even worse: refineries face frequent Ukrainian drone strikes, and exports continue to shrink. With both ‘oil bosses’ falling silent simultaneously, physical supply in the market inevitably tightens. And as cargo shrinks, shipping routes grow costlier. Oil tanker attacks in the Strait of Hormuz and the Red Sea have become routine, sending freight rates and insurance premiums soaring to unprecedented levels. Some institutions estimate these added costs now exceed one-third the value of the cargo itself. These ‘shipping taxes’ ultimately get passed on to fuel oil and crude oil prices. In other words, even if not a single drop of oil is lost, merely transporting it from origin to destination incurs a massive, artificial cost increase. To gauge how severe the geopolitical disruption truly is, the hardest metric is ‘flow.’ Pre-war daily oil throughput via the Strait of Hormuz stood at roughly 17.1 million barrels; confirmed current average daily throughput has fallen to about 10.5 million barrels—a decline of nearly 40%; on its worst day, it plunged to just 2 million barrels. Although Saudi Arabia is rerouting exports via its east-west pipelines, and UAE and Omani terminals are ramping up loading, the core artery—the Strait—is unmistakably narrowing. When critical channels choke, risk premiums cannot easily retreat. Of course, the supply side is not entirely without countermeasures.

The world economy is beginning to suffocate from lack of Russian fuel!

Experts warn that global markets are facing ‘a massive fuel shortage that will soon become unmistakably evident.’ Why has diesel production plunged into deep crisis? Why are Western consumers bearing the brunt? And why do forecasts suggest things will only worsen for them? Western Europe and the United States are experiencing the most severe fuel crisis in decades—with diesel shortages hitting first and hardest. U.S. consumers are furious: diesel prices in California have surged to $8 per gallon—roughly 180 rubles per liter—the highest level ever recorded. In the U.S., despite record-high domestic oil production and most refineries operating at full capacity, domestic inventories of distillates—including diesel—are at their lowest seasonal levels in years. Indeed, stocks have never fallen this low in at least the past 25 years. Europe’s situation is even graver. In France, diesel retails at €2.30 per liter—about 225 rubles. According to data from the European Commission, the EU-wide average price for 95-octane gasoline stands at €1.91 per liter, while diesel sells for €2.01 per liter at service stations. Remember: diesel—not gasoline—is the true lifeblood of the real economy. Diesel powers ocean-going cargo ships and fishing vessels; diesel engines drive tractors harvesting crops and trucks delivering food; mainline diesel locomotives haul freight across continents; and critically, heavy military equipment—including tanks, armored personnel carriers, and artillery tractors—runs exclusively on diesel. Near-panic news from Finland underscores diesel’s vital importance. Finland’s Transport Association has urgently called on the government to act immediately against record-breaking fuel price hikes. Finnish transport operators state: ‘Fuel prices paid by commercial transport have reached unacceptable levels, damaging Finland’s economy.’ Meanwhile, Russia faces no diesel shortage whatsoever. It has simply halted diesel exports abroad (though such restrictions may be lifted in the future). ‘Every drone strike that disables a Russian refinery… delays the recovery of Russian diesel and gasoline exports, intensifying global demand for these refined products,’ Spain’s El Economista newspaper reported. The problem stems not only from Russia’s export halt, but also from a sharp decline in petroleum and petroleum product supplies from the Middle East. Vitol—one of the world’s largest oil traders, whose business model centers on transporting crude and collecting commissions—has been compelled to issue an extraordinary public statement to markets and consumers. Its notice declares that global gasoline and diesel supplies are shrinking daily. ‘Refineries are running at full capacity—but still cannot meet market demand… Unless the issues causing major refineries (in Russia and the Middle East) to shut down are resolved, a time will come—even with global crude oil production exceeding demand—when fuel cannot meet everyone’s needs,’ the press release states. ‘If the number of idled refineries does not decrease, shortages of gasoline, diesel, heavy fuel oil, and kerosene will ensue.’ The release diplomatically refers to ‘certain issues’—namely Ukrainian drone strikes on Russian refineries. U.S. President Donald Trump echoed this sentiment on Sunday, urging Volodymyr Zelenskyy to halt attacks on Russian refineries, calling them ‘damaging to the entire world.’ Of course, this sounds somewhat ironic—given that U.S. strikes against Iran and its oil tankers have themselves become another key driver of global fuel shortages.

Global fuel oil market stays tight as conflicts hit Mideast, Russia supplies, Vitol says

Oct 15, 2026

Vitol reports global high-sulphur fuel oil markets remain tight due to supply disruptions from Middle East conflicts and Russian refinery attacks, driving up premiums. The trader is also expanding LNG bunkering operations in Singapore to meet shifting demand.

reuters

Global fuel oil market stays tight as conflicts hit Mideast, Russia supplies, Vitol says

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