Shipping Fuel Shortage Looms as Refiners Prioritize Diesel
Supply of fuel oil for the shipping industry is getting squeezed by the war-driven tightness in diesel fuel, as refiners prioritize the latter over the former, Reuters has reported, with Asia set to suffer the most severe blow. The shortage is seen at 218,000 barrels daily in the current quarter, according to Energy Aspects, as quoted by Reuters, which would be the first quarter of a shipping…
The shipping industry is facing a potential fuel shortage as refineries prioritize diesel production over fuel oil, according to Reuters. The shortage is expected to be the first of its kind since 2025, with a daily shortfall of 218,000 barrels, reported Energy Aspects. This shortage would be significantly larger than the 6,000 barrels daily shortage experienced in the previous quarter.
The shortage is attributed to the ongoing supply disruption in the Middle East, coupled with refinery damage in the region and Ukrainian drone attacks in Russia, which has led to a ban on diesel exports. Refinery margins are at record highs due to the global energy crisis. As much as a fifth of the Middle East refining capacity, equivalent to 9.6 million barrels daily, has been affected by hostilities.
Refiners have shifted their focus towards diesel production, leading to reduced fuel oil production, which is crucial for powering ships and some power plants. Energy Aspects analyst Royston Huan noted that record-low gasoline and diesel inventories will encourage refiners to maximize secondary unit runs with more fuel oil feedstock barrels, intensifying the fuel oil shortage.
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