Hormuz Is Turning Shipping’s Fuel Bill Into a Supply Crisis

Key Points:

• The Hormuz crisis is significantly disrupting global shipping by constraining bunker fuel supplies, impacting vessel refueling schedules, working capital, and the profitability of trading routes due to delayed deliveries and unreliable fuel availability.
• High-sulfur fuel oil flows through Hormuz have dropped by at least 800,000 tons monthly since February, compounded by Ukrainian attacks on Russian refineries, leading to intensified competition for limited fuel supplies despite some low-sulfur fuel support from China and Nigeria.
• The supply chain is fragmented and vulnerable, with fuel availability varying by grade and port, leading to longer lead times and complicating procurement; inventory levels can be misleading as not all stored fuel is immediately accessible for ship refueling.
• Rising fuel prices are increasing financial pressures on shipowners, with higher costs and tighter credit conditions potentially excluding smaller operators from the market, while many are adapting by making smaller, more frequent bunker purchases and diversifying refueling locations.
• The ongoing instability in the Hormuz region threatens to cause persistent regional shortages, volatile premiums, and extended booking windows, risking systemic disruption to global shipping schedules and increasing costs for customers worldwide.