HSFO Costs Surge by 40% Amid Conflict Disrupting Major Singapore Bunkering Center

Fuel Oil Prices Surge Amid Strait of Hormuz Disruptions

This week has seen a sharp increase in fuel oil prices, driven by significant delays in tanker movement through the Strait of Hormuz. The resulting supply constraints are being felt across Asia, particularly in Singapore, a major center for ship refueling.

The Middle East, a crucial supplier of high-sulfur fuel oil (HSFO), has experienced a near standstill in exports due to the ongoing conflict involving Iran. This has left Asian markets, especially Singapore, facing shortages as shipments remain stuck.

According to traders and analysts interviewed by Reuters, the upward trend in prices is expected to persist. In Singapore, HSFO prices have soared by more than 40% since the onset of the conflict. Prices for low-sulfur fuel oil (LSFO) and very low-sulfur fuel oil (VLSFO) have also climbed, with LSFO up roughly 30% since the war began.

These escalating fuel costs are likely to increase shipping expenses, which could, in turn, contribute to broader inflationary pressures.

With Middle Eastern supplies still inaccessible, Asian importers are racing to secure fuel oil before Singapore’s current reserves are depleted more rapidly.

Some market participants are turning to the Americas for alternative sources, but available volumes fall short of meeting demand. Although Venezuela’s market has recently opened up, its fuel oil exports have so far remained within Western markets.

Russia and Iran also produce fuel oil, but international sanctions complicate purchases for many buyers, particularly those outside China. Additionally, Iranian shipments remain blocked at the Strait of Hormuz.

“Everyone is struggling to find oil for the second half of March,” a Singapore-based trader told Reuters.

“Tankers are too expensive and arbitrage to Singapore is closed.”