Full Breakdown
Global HSFO Market Strains as Hormuz Tensions and Russian Refinery Hits Cut Supply
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Core Event: Tight HSFO Supplies Drive Premiums
On October 16, 2026, Kieran Gallagher, Vitol’s Asia head, warned that renewed hostilities around the Strait of Hormuz and Ukrainian attacks on Russian refineries have sharply reduced the availability of high-sulfur fuel oil (HSFO). The contraction has lifted Asian bunker-fuel premiums to the highest levels recorded in several months.
Background & Context
Accelerated crude exports through the Hormuz corridor are not translating into greater HSFO output because refiners are prioritising higher-margin products such as diesel. Conflict-related disruptions have cut Iranian HSFO shipments by 800,000 tons per month, while Ukrainian strikes on Russian refineries have removed an additional 1 million tons per month from the market. North-Asian refiners plan to consume more than 1 million tons of HSFO in November to feed upgrading units, a shift prompted by disruptions to Saudi crude exports via the Red Sea.
Data & Statistics
- HSFO flows through Hormuz are down by at least 800,000 tons per month since February (Vitol statement).
- Ukrainian attacks on Russian refineries are estimated to shave 1 million tons per month from global HSFO supply.
- Export volumes via Hormuz averaged 3.7 million tons per month between January 2025 and February 2026 (Kpler data).
- Singapore’s HSFO price reached a seven-month high in early October 2026, according to ClearLynx LLC.
Official Statements & Responses
He added that restoring medium- and heavy-oil supplies to processors would reduce reliance on HSFO as a feedstock and release barrels back into the bunker pool. Regarding low-sulfur fuel oil (LSFO), he described the market as “more benign” because of continued Chinese exports and increased operating rates at Nigeria’s Dangote refinery, which now ships two to three Suezmax cargoes per month.
Verbatim Quotes
- “Many are looking to increased crude flows through the Strait of Hormuz as a silver bullet, but more crude does not necessarily mean more high-sulfur fuel oil,” — Kieran Gallagher