Ship Fuel Shortage Worsens on Geopolitical Tensions

## Catalyst Analysis: Geopolitical Conflicts Constrain Ship Fuel Supply Ongoing conflicts, including the U.S.-Israel war on Iran and Russia's war on Ukraine, are severely impacting the availability of heavy fuel oil (HFO), commonly known as bunker fuel, essential for maritime transport. Verified facts indicate that Middle East fuel oil exports have declined by 45% year-on-year from March to August. This supply crunch has led to a sharp increase in fuel prices, with Singapore benchmarks rising 76% since the escalation of tensions with Iran, reaching nearly $825 per metric tonne ($130 a barrel) as of September 1.

## Impact on Global Trade and Shipping Sectors The reduced availability of bunker fuel threatens to drive up global freight costs. This escalation could ripple through supply chains, affecting the prices of goods and commodities for consumers and manufacturers worldwide. Disruptions are also being felt along key maritime routes, including the Strait of Hormuz and the Red Sea, due to direct attacks and regional instability.

### Winners, Losers & Uncertainty While the direct beneficiaries are not specified, sectors reliant on stable global shipping rates, such as retail and manufacturing, may face increased costs. Energy producers exporting refined products could see short-term price strength, but overall trade volumes may be dampened. The ongoing geopolitical uncertainty creates a high-volatility environment for shipping and commodity markets.

### Risk Watch — Legal/Timeline The situation is directly tied to the evolving geopolitical landscape in the Middle East and Eastern Europe. Any further escalation or de-escalation of conflicts will have a direct impact on fuel availability and pricing. The duration of these geopolitical tensions is the primary risk factor influencing the outlook for ship fuel supply and related costs.