Fuel Oil Shortage Hits Shipping Industry Amid War-Driven Market Tightness

The shipping industry is facing a severe fuel oil shortage as refiners worldwide prioritize diesel production amid market tightness, driven by war and reduced crude supply from the Middle East. The International Energy Agency notes that hostilities have knocked out about one-fifth of Middle East refining capacity, totaling roughly 9.6 million barrels per day.

According to Energy Aspects, a supply deficit for marine fuel is projected at 218,000 barrels per day in the current quarter, marking the first quarterly shortfall since 2025. The gap was a mere 6,000 barrels daily that year.

Rystad Energy analysts indicate that fuel oil supply will remain critically tight in the third quarter due to prolonged supply disruptions in the Middle East. Ukrainian drone attacks have curtailed diesel production in Russia, prompting the country to ban diesel exports and further tightening supply.