On September 7, market data reported from London showed a widening third-quarter deficit in the global fuel oil market, with Energy Aspects forecasting a shortfall of 218,000 barrels per day and Asia expected to bear the greatest pressure. The squeeze is developing because refinery and tanker disruptions in Russia and the Middle East are reducing available supply, while refiners are directing more material toward higher-margin diesel, gasoline and jet fuel instead of producing or exporting fuel oil.
The effect is already visible in bunker prices.
As of September 1, very low sulphur fuel oil, or VLSFO, was trading at just under $825 per metric ton in Singapore, the world’s largest bunkering hub. The price had risen approximately 76% since the start of the Iran war, compared with an increase of about 40% in Brent crude over the same period.
That gap matters. It indicates that shipowners are paying not only for more expensive crude but also for a growing fuel-oil-specific scarcity premium.
Inventories are reinforcing the warning. Fuel oil stocks in Singapore, the Amsterdam-Rotterdam-Antwerp region and Fujairah are approximately 30% below their three-year seasonal averages. These three locations are central to the global bunker market. Lower inventories can lead to higher spot premiums, tighter delivery windows and additional costs when ships must alter bunkering schedules or purchase fuel at less competitive ports.
Why supply is tightening
Russia’s fuel oil exports fell to about 591,000 barrels per day in August, the lowest level recorded in Kpler data going back to 2017. The figure compares with an average of more than 860,000 barrels per day in 2025.
Middle Eastern exports have also declined sharply. From March through August, the region exported an average of approximately 447,000 barrels per day, down 45% year on year. Russia and the Middle East are both important suppliers to Asian markets, making the simultaneous decline particularly significant for Singapore and other regional bunkering centres.
Refinery economics are adding another layer of pressure. With gasoline and diesel inventories running low and margins for transport fuels remaining attractive, refiners have an incentive to process more fuel oil through secondary units and convert it into higher-value products.
As a result, some components that could otherwise enter the marine fuel blending pool are being used to produce diesel, gasoline or jet fuel. Bunker fuel is competing for refinery molecules—and it is currently losing that competition.
The transmission into chemical shipping
The chemical industry will not experience the increase through a single, uniform freight adjustment. The cost will move through different vessel types and contracts at different speeds.
Chemical tankers, product tankers, LPG carriers and some dry bulk vessels consume VLSFO or marine gasoil directly. When bunker prices rise, shipowners generally recover the additional expense through bunker surcharges, higher voyage quotations or more expensive time-charter rates.
Containerised shipments of additives, pigments, polymers, resins and speciality chemicals are also exposed through carrier fuel-adjustment mechanisms.
Spot cargoes are likely to feel the pressure first. Long-term contracts often contain fuel-linked adjustment clauses, allowing costs to be passed through according to an agreed formula. Companies booking vessels or containers in the spot market must deal immediately with the prevailing fuel price, available tonnage and route conditions.
The economics may become especially difficult for lower-value bulk chemicals. When freight represents a large share of the delivered price, even a moderate increase can remove the advantage of sourcing material from a distant supplier.
Longer voyages are magnifying the problem. Ships avoiding the Red Sea or the Bab el-Mandeb Strait consume more fuel and remain occupied for longer periods. This reduces effective vessel availability and raises the fuel cost per cargo. Even if bunker prices stabilise, additional sailing distance can keep delivered chemical costs elevated.
Asia sits at the front of the cost chain
Asia is particularly exposed because of its reliance on Gulf fuel oil flows. Singapore consumes nearly one million barrels per day of bunker fuel and imports more than half of that requirement. Replacing disrupted Gulf supply with cargoes from more distant regions takes time and usually involves higher freight costs.
For Chinese chemical companies, the pressure is likely to be most visible in Middle Eastern feedstock imports, intra-Asian trade and long-haul exports to Europe, Africa and Latin America.
Sellers quoting on a CIF basis may face a direct squeeze on margins as freight costs rise. Under FOB arrangements, the seller may not pay the freight bill, but higher landed costs can still weaken overseas demand or force buyers to renegotiate prices.
Companies should therefore watch more than crude benchmarks. Singapore VLSFO prices, inventories at the three major bunkering hubs, Russian and Middle Eastern fuel oil exports, and carrier bunker surcharge revisions may provide more direct indications of near-term chemical logistics costs.
The projected 218,000-barrel-per-day deficit remains a market forecast; it does not mean ships are already unable to obtain fuel across every port. However, the underlying conditions—higher prices, lower hub inventories and reduced exports from major suppliers—are already present.
For chemical traders, the central question is becoming increasingly practical: Can the same cargo still reach the same customer at the freight cost used in the original quotation?
