Marine fuel supplies in Asia—particularly in Singapore, the world’s largest bunkering hub—are expected to remain adequate in the short term but tighten from April onwards, according to Wood Mackenzie. This comes amid the ongoing US/Israel-Iran war, which has left cargoes stranded in the Middle East Gulf with limited routes out.
While Singapore’s port authority maintains that supply is currently sufficient, market participants expect conditions to tighten in the coming weeks. Bunker suppliers say they are rapidly selling down inventories, prioritizing immediate sales over future restocking due to the steep backwardation in fuel oil markets.
So far this month (up to March 24), timespreads have surged to record highs. The March/April and April/May spreads for 0.5% sulphur fuel have averaged $89/mt and $61/mt respectively, while high-sulphur 380-cst spreads stand at $55/mt and $46/mt. Such strong backwardation discourages storage, as holding inventory into the next month erodes value—further incentivizing prompt sales.
Suppliers, who typically rely on a mix of term contracts and spot purchases, say they have sufficient volumes for March but express growing uncertainty over April replenishment.
Singapore’s fuel oil inventories remain elevated at 24.04 million barrels for the week ended March 18, just below the prior week’s eight-week high of 24.16 million barrels, and well above January and February averages of 23.55 million and 23.01 million barrels respectively.
However, inflows are weakening. Fuel oil imports into Singapore have reached an estimated 5.64 million mt so far this month—the lowest since December’s 5.19 million mt. The decline is largely due to reduced arrivals from the Middle East, which accounted for just 1.35 million mt, or 24% of total inflows. This marks the lowest share since last May and is significantly below February’s 2.92 million mt.
Middle Eastern cargoes—comprising high-sulphur barrels from Saudi Arabia, United Arab Emirates, Iraq, and Bahrain, as well as low-sulphur supply from Kuwait—typically take two to three weeks to reach Singapore. Most shipments departed before the conflict escalated on February 28, though a few vessels have managed to load since, including the Shandong Yihe from Khor Fakkan, Maersk Kara from Sohar and the Sofia II, which is listed as having high sanctions compliance risk, from Fujairah port.
Singapore’s marine fuels market recorded a monthly high of 4.73 million mt in 2025 and has averaged an even stronger 4.95 million mt over the first two months of 2026. Low-sulphur fuel oil (LSFO) dominates demand at around 2.4 million mt/month (51%), followed by high-sulphur fuel oil (HSFO) at 1.81 million mt/month (38%).
Wood Mackenzie expects LSFO supply to face the greatest strain. Cargoes from Al Zour Refinery—a key source of ready-blended 0.5% sulphur fuel—are unable to exit via the Strait of Hormuz. At the same time, strong diesel margins are diverting low-sulphur blendstocks into gasoil production, further tightening availability.
No tankers have departed the Middle East Gulf after loading from Al Zour since the disruption began. The 130,000-mt Nordic Vega Fuel remains the only vessel scheduled to load this month but is currently stuck in the Gulf. Notably, fuel oil exports from the 615,000-bpd refinery had surged earlier this year, averaging about 1.1 million mt in both January and February—up sharply from around 400,000 mt/month in 2025.
Reflecting the tightening LSFO market, prices have spiked. Ex-wharf premiums have surged past $100/mt at their peak and are averaging under $55/mt, far higher than February’s ~$4/mt and the 2025 average of $5.50/mt, but came off to under $7/mt on March 24.
In contrast, HSFO supply is expected to be more resilient, supported by abundant barrels from Russia that flow into China and the broader Asian bunker market—particularly if sanctions waivers are granted. HSFO premiums have risen more moderately, averaging around $32/mt and peaking just above $70/mt, though still significantly above February’s $2/mt and the 2025 average of $3.50/mt, but coming off to under $3/mt on Mar 24.
Wood Mackenzie believes that the sharp fall in prices resulted in players wanting to clear their stocks before the month is over, so as not to suffer the sharp backwardation, as March draws to a close.
The selling pressure likely came from players who held on to their barrels in anticipation of higher premiums and getting desperate as the month draws to a close.
Wood Mackenzie expects ex-wharf premiums, particularly for LSFO, will rebound strongly from end March levels as supplies tighten again.
