Fuel Oil Shortage Looms as Refiners Prioritize Diesel
A looming shortage of fuel oil is expected in the third quarter due to refiners prioritizing diesel and other products over fuel oil production. The disruption is attributed to wars that have affected crude processing and tanker traffic, causing refiners to maximize output of more profitable products.
Crude oil prices have been relatively stable, but refined product prices have surged as strikes damage refineries in Russia and the Middle East and curbs on ship traffic choke flows. China has also reduced refining capacity and exports to avoid burning stocks.
The deficit is expected to hit 218,000 barrels per day in the third quarter, according to Energy Aspects, a marginal shortfall since the third quarter of 2025. The tight supply threatens to raise costs for shipowners and power generators already dealing with war-related disruptions.