Two of the world's three largest ship refueling hubs - Singapore and Fujairah - have seen fuel oil supply drop to dangerously low levels as the Iran war disrupts energy flows through the Strait of Hormuz, "Hvylya" reports, citing Bloomberg.
The shipping industry - typically conservative in its public statements - has begun sounding the alarm. Vincent Clerc, CEO of AP Moller-Maersk, told French newspaper Le Monde: "If we do nothing, we risk ending with dry supply points in Asia." Problems are also emerging at several other ports within the global top 10, though supply in Europe and the Americas remains adequate.
The crisis is driven by the closure of the Strait of Hormuz, which has cut off not only crude oil flows but also refined fuel oil from Saudi, Kuwaiti and Emirati plants. Those facilities account for 20% of the world's internationally traded fuel oil, according to the International Energy Agency. Fuel oil prices reflect the severity: $140 a barrel in Singapore, nearly $160 in Fujairah, and up to $175 for grades meeting stricter environmental standards.
The industry has responded by redirecting fuel oil shipments from ports in Europe - Rotterdam and Gibraltar - and the Americas - Long Beach and Panama - toward Asia. "We are starting to organize ourselves to transfer stocks from one continent to another and continue operating," Clerc said. But the longer the strait remains closed, the higher the risk that ships simply run out of fuel.
The situation is compounded by the fact that the world has already deployed its main buffers against an oil shock: bypassing refineries and releasing strategic petroleum reserves. The only remaining mechanism to balance the market is demand destruction through even higher prices.
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