Iran and Ukraine wars drive a ship-fuel shortage, raising risks for global trade

The shipping industry is running short of the heavy fuel oil that powers most large vessels and oil tankers, adding another strain to global trade already disrupted by conflict and restricted transit routes.

The fuel, commonly known as bunker fuel, is produced when crude oil is refined. Ships also use marine gas oil, marine diesel oil and lower-pollution fuels such as very low sulphur fuel oil. But heavy fuel oil remains central to the movement of large cargoes around the world, so any shortage can push up freight costs for goods and commodities.

Analysts point to the wars in West Asia and Europe, as well as refiners’ decisions to produce more profitable fuels. Data from energy trade analytics company Kpler shows that Middle East fuel oil exports fell 45% year on year to an average of 447,000 barrels per day from March to August. Energy consultancy Energy Aspects told Reuters it expects the fuel oil market to post a deficit of 218,000 barrels per day in the third quarter.

The conflict involving the United States, Israel and Iran has disrupted maritime routes, including the Strait of Hormuz, through which about 20% of global oil and gas passed before the war. Iran has also attacked several oil facilities in the Gulf. Attacks by Yemen’s Iran-aligned Houthis on shipping in the Red Sea and around the Bab al-Mandeb Strait have further constrained supply routes.

Russia’s war in Ukraine has added to the pressure. Ukrainian drone attacks on Russian refineries have affected output, and Russia’s fuel oil exports fell to a record low of 591,000 barrels per day in August, compared with an average above 860,000 barrels per day in 2025, according to Kpler data dating to 2017. The result is less crude moving from major producing regions, especially the Gulf and Russia, while refiners favor diesel production over fuel oil.