The near-total closure of the Strait of Hormuz since late February 2026 has delivered a devastating blow to global fuel oil markets, severing the primary export route for two of the world's largest fuel oil suppliers. Iran and Iraq, which together accounted for roughly 40% of Middle Eastern fuel oil exports before the conflict, have seen their seaborne shipments collapse to near-zero levels.
According to the International Energy Agency's May 2026 Oil Market Report, Gulf crude and condensate loadings have been cut by approximately 10 million barrels per day since February, with total refined product exports — including fuel oil, diesel, and jet fuel — falling by more than 13 million bpd. The IEA described the disruption as the largest single oil supply shock in history, with roughly 20% of global oil and LNG trade stranded behind the chokepoint. Global observed inventories, including oil on water, were drawn down by 250 mb over March and April, or 4 mb/d.
Iraq, historically the region's dominant supplier of heavy sour crude grades ideal for fuel oil production, has effectively lost all seaborne export capacity. The country's exports of Basrah Heavy crude — a key feedstock for fuel oil refineries across Asia — have fallen from pre-war levels of roughly 700,000 bpd to effectively zero since March, according to tanker tracking data compiled by S&P Global Commodity Insights. Iraq declared force majeure on all oilfields developed by foreign companies on March 17, reflecting the severity of the export constraints.
Iran's fuel oil exports, which averaged 200,000–250,000 bpd in 2025, have been sharply curtailed by both the Hormuz blockade and subsequent U.S. naval enforcement measures targeting Iranian-linked vessels. Iranian-linked tankers attempted ship-to-ship transfers in the Gulf of Oman and off Malaysia in the early weeks of the crisis, but a tightening U.S. blockade has progressively eliminated those workarounds. Kpler vessel tracking data shows tanker transits through the Strait of Hormuz are now approximately 90% lower than pre-war levels.
The supply vacuum has been acutely felt across Asia, which absorbed 80–85% of all fuel oil and other refined products that transited Hormuz before the war. Singapore-delivered very low sulfur fuel oil (VLSFO) surged from roughly $500 per metric ton before the conflict to more than $800 per ton as of early May, according to price assessments from Ship & Bunker. Refinery crude throughputs are forecast to plunge by 4.5 million bpd in the second quarter of 2026 to 78.7 million bpd, the IEA reported on May 13, citing infrastructure damage, export restrictions, and severe feedstock shortages across the Middle East and Asia-Pacific.
The U.S. EIA's May 2026 Short-Term Energy Outlook assumes the Strait of Hormuz will remain effectively closed through late May, with flows slowly resuming in late May or early June. Pre-war trade patterns are unlikely to fully normalize before late 2026 or early 2027. The EIA estimates that Iraq, Saudi Arabia, Kuwait, UAE, Qatar, and Bahrain collectively shut in 7.5 million b/d of crude production in March alone, with Brent crude averaging $117/b in April — $46/b above pre-crisis levels.
The broader Middle East accounts for more than 40% of global crude oil exports and more than 20% of oil product exports, according to the Congressional Research Service. With only Saudi Arabia and the UAE possessing limited alternative pipeline routes (an estimated 3–5 mb/d of spare bypass capacity), the vast majority of Gulf production remains stranded behind the Hormuz chokepoint. Even if a ceasefire holds, analysts at JPMorgan note that restoring full export infrastructure and tanker insurance markets could take 12–18 months.