Instead of switching to cleaner-burning alternatives such as marine gasoil and low-sulphur fuel oil, many shippers have installed exhaust gas cleaning devices known as scrubbers to continue using high-sulphur fuel oil. Western sanctions and attacks on shipping in the Red Sea have further driven this unforeseen demand.
“Fuel oil markets have shown remarkable resilience, with demand outperforming expectations due to several key factors, such as still-firm power generation demand in the Middle East and Red Sea shipping disruptions because of Houthi attacks,” said Royston Huan, Analyst at Energy Aspects in August.
While global demand for diesel and jet fuel has fallen globally since 2019 pre-pandemic levels, and gasoline consumption has risen by just 1.9%, fuel oil demand is up by 4.8% to an average 6.5 million barrels per day (bpd) in 2025, according to the International Energy Agency’s June annual report.
Fuel oil could still strengthen near-term owing to demand from refineries, but we expect the supply-demand balance to become looser in November to December alongside the return of some refineries in Saudi Arabia and Brazil from maintenance, Huan added.
