The global fuel oil and bunker market is experiencing its tightest conditions in four years, driven by a structural disconnect between well-supplied crude markets and severely constrained refinery output. The IEA's July 2026 Oil Market Report identifies that refined product cracks and refinery margins surged to four-year highs by early July, as increased crude supplies pushed oil prices lower while product markets remained tight. Global refinery runs rose by 1.5 mb/d in June but were still 6 mb/d below year-ago levels.
The constraints are multiple and compounding. Middle East export refineries have yet to restart after the Hormuz crisis, limiting heavy-sour crude processing capacity that is critical for fuel oil production. Ukrainian attacks on Russian refineries and export infrastructure have tightened product markets in Russia and beyond, according to the IEA. And the Caspian Pipeline Consortium suspension of crude loadings at its Black Sea terminal has disrupted approximately 80% of Kazakhstan's oil exports, further limiting feedstock for European and Mediterranean refineries.
The world's largest bunkering hub, Singapore, is feeling the strain acutely. June fuel oil inventories dropped below 18 million barrels as net imports declined 24%, according to ENGINE data published by Manifold Times. By late July, VLSFO (Very Low Sulfur Fuel Oil) availability in Singapore had tightened sharply, with suppliers recommending lead times of 15-18 days — up from 13-17 days the previous week and roughly 9 days earlier in the month. HSFO (High Sulfur Fuel Oil) lead times ranged from 9-13 days. The vessel throughput rose only 1.6% year-on-year to 4.67 million metric tons delivered in June.
North Asian ports face similar constraints. In Zhoushan, China's largest bunkering port, operations at outer anchorages have remained suspended since July 7 due to adverse weather from Super Typhoon Bavi. VLSFO lead times in Zhoushan extended to approximately 12 days, up from about 8 days, according to ENGINE's July 22 outlook. South Korea's southern ports reported VLSFO and LSMGO lead times of 9-16 days. Japan's ports similarly showed tight availability across multiple grades.
In Europe, the ARA (Amsterdam-Rotterdam-Antwerp) hub has very tight prompt HSFO and VLSFO supply, with buyers advised to book about seven days ahead to avoid high premiums, a trader told ENGINE on July 2. Independently held fuel oil stocks in the region averaged about 8% higher in late June compared to May, but this has not materially eased availability.
US fuel oil markets tell a comparable story. Domestic residual fuel oil output rose 5% in July to 318,000 b/d, while imports climbed 68,000 b/d to 180,000 b/d, according to EIA data. But supply, a metric that captures demand, fell 61,000 b/d to 292,000 b/d, with inventories declining 561,000 barrels month-on-month to 21.18 million barrels. The draw reflects firm demand from bunker blending, industrial use, and refinery coking units running at elevated utilization.
The regulatory backdrop adds further structure. New MARPOL Annex VI Emission Control Areas in the Canadian Arctic and Norwegian Sea entered into force on March 1, 2026, boosting demand for low-sulfur compliant fuels. South Korea's S-Oil began supplying B30 VLSFO in late July, the latest example of the industry shift toward lower-carbon bunker fuels that carries a premium over conventional HSFO. The IMO's 2020 sulfur cap continues to reshape fuel oil consumption patterns, with VLSFO now the dominant bunker grade globally while HSFO is increasingly restricted to scrubber-equipped vessels in high-scrubber-adoption regions like Asia-Pacific and the Middle East.
The bunker fuel market is projected to grow from approximately $136.7 billion in 2026 to $181-195 billion by 2033-2034, at compound annual growth rates of 4-5%, according to Grand View Research and Fortune Business Insights. But for procurement teams navigating the current environment, the immediate challenge is physical availability and pricing power at the four major bunkering hubs that control roughly 40% of global volumes: Singapore, Rotterdam, Fujairah, and Houston. The outlook favors integrated suppliers with captive refinery production over spot-dependent traders.
Fuel oil and bunker buyers face the tightest physical market since 2022. At the world's largest bunkering hub, Singapore, VLSFO delivery requires booking 15-18 days ahead — a lead time that squeezes short-notice procurement and forces higher inventory carrying costs. Across East Asian ports, similar constraints apply, with Zhoushan bunkering suspended since July 7. Buyers should extend procurement planning windows to at least 3-4 weeks and lock in term volumes where possible rather than relying on spot availability. The refinery margin environment is the structural driver: product cracks at four-year highs mean refiners have limited incentive to maximize fuel oil output when they can shift yields to more profitable diesel and jet fuel. Buyers should expect elevated HSFO-VLSFO spreads to persist as scrubber-equipped fleets compete for limited high-sulfur volumes. For organizations with bunker exposure, consider securing VLSFO term contracts through Q4 2026, as winter heating demand in Northeast Asia will compete with bunker demand for available fuel oil volumes. The geopolitical backdrop — Middle East refinery outages, Russian infrastructure attacks, and Caspian pipeline disruption — adds layers of supply risk that are unlikely to resolve before Q1 2027.