This article analyzes the recent disruption in the global marine fuel market, focusing on how price dynamics evolved across regions, how different fuel types responded to supply shocks, and how logistics and market structure shaped the outcome. By combining price data, spreads, seasonal patterns, and forward indicators, it explains why the crisis had uneven impacts across regions and products, with particularly strong effects in Asia and the Middle East.
By late March 2026, the global marine fuel market began to diverge significantly across regions. While prices increased globally, the scale and speed of this increase varied. In Asia and the Middle East, disruptions to oil flows through the Strait of Hormuz and incidents near Fujairah triggered a sharp escalation in prices. In Singapore, the world’s largest bunkering hub, VLSFO rose from approximately $490/t delivered to around $1,078/t delivered, reflecting both supply shortages and increased urgency in procurement. In contrast, Rotterdam saw a more moderate increase to approximately $755-788/t delivered.
This divergence reflects not only differences in supply conditions, but also differences in accessibility and delivery speed. In practice, the market began to price not only fuel itself, but also the difficulty of securing it.
Importantly, this fragmentation did not emerge suddenly. As early as October 2025, price relationships between key hubs such as Singapore and Fujairah had already weakened, with lower correlation and temporary divergence. This indicates that the market entered the crisis in a relatively vulnerable state, with limited resilience to supply disruptions.
The analysis focuses on three key fuel types: VLSFO, HSFO, and MGO. Although these products serve similar functions in shipping, their demand structure and supply flexibility differ significantly.
VLSFO (Very Low Sulfur Fuel Oil) has become the dominant fuel following IMO environmental regulations. It is used by vessels that are not equipped with scrubbers, making its demand broad and relatively inflexible. At the same time, its production relies on blending components, which makes it sensitive to disruptions in upstream supply and refining processes. As a result, it is often the first segment to experience strong price pressure during supply shocks.
HSFO (High Sulfur Fuel Oil), by contrast, is used by vessels equipped with scrubbers, creating a smaller but relatively stable demand base. This makes the segment more resilient, although it still reacts to major disruptions.
MGO (Marine Gas Oil) is a cleaner and more refined product, produced in smaller volumes and with limited supply flexibility. For this reason, it tends to show the strongest price increases during periods of stress.
These structural differences are essential for understanding market behavior: when supply is constrained, the strongest price increases occur in products where demand cannot easily adjust and supply cannot quickly expand.
The transition from a stable to a disrupted market becomes visible in price dynamics. Before the crisis, VLSFO prices across Singapore, Fujairah, and Rotterdam remained within a narrow range of approximately $473-502/t delivered, indicating efficient arbitrage and a well-integrated global market.
This situation changed rapidly in early March. As shown in the chart below, VLSFO prices in Fujairah rose sharply to approximately $1,078/t delivered, while prices in Rotterdam remained significantly lower.

This divergence reflects a shift in pricing behavior: prices began to incorporate not only supply-demand fundamentals, but also regional constraints and delivery risks.

At the same time, the HSFO chart above shows a more moderate and uniform increase across regions. This highlights the role of demand structure: HSFO demand remains relatively stable due to scrubber-equipped vessels, while pressure concentrates in the VLSFO segment, which serves a broader and less flexible demand base.
The uneven reaction of regional markets becomes clearer when examining structural differences that existed even before the crisis. The distribution chart below shows that marine fuel prices in India and East Asia historically traded within a wider range than in Europe, reflecting higher sensitivity to supply changes.

In practical terms, this means that even relatively small disruptions in flows can lead to more noticeable price movements. By contrast, the European market tends to be more stable, with narrower fluctuations supported by more diversified supply routes. As a result, the stronger reaction in Asia reflects not only the immediate shock, but also an existing structural pattern.
Seasonality further intensified the situation.

This seasonal chart shows that spring is a period of increasing fuel demand in Asia, as shipping activity recovers after the winter slowdown. The market was already entering this phase of rising demand when the supply disruption occurred. Under normal conditions, this increase would be absorbed, but in 2026 it coincided with reduced supply, creating a reinforcing effect: demand rose while availability declined. As a result, prices increased sharply rather than gradually.
This dynamic is reflected in the conflict shock diagram, where prices in Singapore rose by nearly 100% for VLSFO and HSFO, and even more for MGO.

This indicates a rapid repricing across all fuel types, with differences driven by their structural characteristics.
The strongest increase in MGO reflects its limited substitutability and more constrained supply. VLSFO also shows strong growth due to its central role and broad demand, while HSFO increases more moderately given its smaller, more specialized demand base.
Taken together, this suggests that the initial price shock was driven by a combination of factors, including seasonal demand, structural sensitivity in Asian markets, and differences between fuel types.
At this stage, the market was already shifting away from a balanced global system toward a more fragmented structure, where regional and product-specific factors became more important. Geographical spreads provide further insight into this shift. Before March 2026, the difference between VLSFO delivered prices in Singapore and Fujairah remained minimal, reflecting efficient arbitrage and market integration.
However, an early signal appeared in October 2025, when the VLSFO delivered price in Fujairah temporarily exceeded the same indicator in Singapore. Although short-lived, this deviation shows that the market had already become sensitive to local imbalances. This suggests that even small changes in flows or availability could disrupt price alignment. While arbitrage still functioned and quickly corrected the imbalance, maintaining stability required more effort than before.
During the March disruption, the arbitrage mechanism weakened significantly. The spread between Singapore and Fujairah widened to approximately -$105/t (Singapore minus Fujairah), while the spread between Fujairah and Rotterdam exceeded $200/t delivered. These are not just larger price differences – they indicate a structural change in how the market operates. Under normal conditions, such differences would create arbitrage opportunities that quickly bring prices back into alignment. In this case, however, the persistence of these spreads suggests that physical constraints prevented this adjustment.
In practical terms, the issue was not only the price of fuel itself, but the ability to move it between locations. Even when fuel was available in one region, it could not be easily redirected to another, leading to increasingly localized pricing.

This shift is further confirmed by the chart above, where VLSFO delivered prices in Fujairah, Khor Fakkan, and Kuwait move almost identically. This synchronization indicates that the disruption affected the entire Persian Gulf region rather than a single port.
This distinction is important. A localized disruption can typically be resolved through alternative routes or redistribution of supply, while a regional disruption affects multiple nodes simultaneously and reduces the system’s ability to adjust.
The role of logistics becomes particularly clear in the delivered minus ex-wharf spread, which reflects the difference between terminal prices and prices delivered to vessels.

During the peak of the crisis, this spread increased sharply, especially in Fujairah, indicating a significant rise in the cost of physical delivery. Importantly, this does not necessarily mean that fuel became more expensive at the source; rather, it reflects higher costs and constraints associated with delivery.
These constraints include limited availability of barges, congestion, delays, and additional operational risks. At the same time, uncertainty may also be priced into delivery costs, further increasing the premium.
The subsequent normalization of this spread suggests that these logistical constraints were acute but temporary. Once operations stabilized, delivery costs moved closer to normal levels, although during the peak they played a central role in price formation.
Product spreads provide additional insight into how the market adjusted internally. The data on charts below shows that the VLSFO-HSFO spread increased significantly, while the MGO-VLSFO spread widened even further.

This indicates that the market increasingly differentiated between fuel types based on their substitutability and production flexibility. Fuels that are harder to replace or scale became relatively more expensive.
The widening of the MGO-VLSFO spread is particularly indicative of supply constraints in more refined products. At the same time, the VLSFO-HSFO spread reflects differences in demand structure, with stronger pressure in the VLSFO segment due to its broader use.
Taken together, these indicators show that the crisis was not only about rising prices, but also about a weakening of the mechanisms that normally keep the market integrated. Arbitrage became less effective, logistics emerged as a constraint, and regional factors began to play a more dominant role in price formation. At this stage, the market had effectively shifted away from a single integrated system toward a more fragmented structure, where location and delivery conditions became key drivers of pricing.
The final layer of analysis comes from indicators that reflect how the shock evolved across regions and how the market assessed future developments. Indexed price movements show that Fujairah experienced a faster and more pronounced increase in prices compared to Rotterdam.

This confirms that regions more directly linked to Middle Eastern supply flows were more exposed to the disruption, both in timing and magnitude.
The regional shock distribution reinforces this pattern.

The largest price increases are observed in Asia and India, while Europe shows a significantly more moderate response. This indicates that the impact of the disruption depended on regional supply dependencies and the flexibility of logistics systems.
Forward curves provide insight into how the market evaluated future developments.

Prices for near-term deliveries are significantly higher than for cargoes with later delivery dates, indicating a strong premium for immediate availability.
At the same time, prices for later deliveries remain above pre-crisis levels. This suggests that while the market expects some easing of the immediate imbalance, it continues to price in elevated risk over a longer horizon. This structure of the forward curve reflects a situation where the shortage is perceived as acute, but not necessarily permanent.
Policy developments also influenced market expectations. In addition to waivers related to Russian-origin supply, the OFAC license issued on March 20 allowing the unloading of certain Iranian cargoes introduced additional volumes into the market.
These volumes did not change the initial dynamics of the shock, but likely contributed to easing short-term pressure by improving availability in specific locations. This highlights that the impact of additional supply depends not only on its volume, but also on timing and the ability to integrate it into existing flows.