The shipping industry, already heavily constrained by restrictions on transit through key waterways such as the Strait of Hormuz, faces another challenge stemming from the US-Israel war on Iran and Russia’s war on Ukraine: a shortage of fuel oil used by ships and power plants. The fuel used by ships powers the transport of large cargoes around the world. Any shortage of this fuel could drive up global freight costs, which could in turn affect consumers and manufacturers of goods and commodities.
Most ships and oil tankers mainly use heavy fuel oil (HFO), commonly known as bunker fuel, to power their engines. This fuel is produced when crude oil is refined. Other commonly used marine fuels include marine gas oil (used by smaller vessels), marine diesel oil (used in marine engines) and less polluting fuels like very low sulphur fuel oil (VLSFO).
Why is ship fuel running low and why does it matter? According to analysts, the wars in West Asia and Europe, along with refiners opting to produce more profitable fuels, have contributed to the shortage. Middle East fuel oil exports were down by 45 percent year on year to an average of 447,000 barrels per day from March to August, data from energy trade analytics firm Kpler shows.
Energy consultancy Energy Aspects told news agency that it expects the fuel oil market to face a deficit of 218,000 bpd in the third quarter. This is the first shortfall it has estimated since the third quarter of 2025, when it was a marginal 6,000 bpd. The US-Israel war on Iran has paralysed key maritime trade routes like the Strait of Hormuz, through which about 20 percent of global oil and gas passed before the start of the war.
Iran has also hit multiple oil facilities in the Gulf in retaliation against the US. Attacks by Yemen’s Iran-aligned Houthis on shipping in the Red Sea and around the strategic Bab al-Mandeb Strait, one of the world’s most important shipping routes, have also disrupted shipping and constrained supply routes. Besides the war on Iran, Russia’s ongoing war on Ukraine has also impacted oil supplies.
Ukraine has in recent weeks bombed multiple major Russian refineries. Russia is the world’s second-largest exporter of crude oil. Ukrainian drone attacks have affected Russia’s refinery output, with its fuel oil exports in August hitting a record low 591,000 bpd, down from an average of over 860,000 bpd in 2025, according to Kpler data going back to 2017.
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