Eng
A shortage of fuel oil used in ships and power plants looms as refiners increasingly squeezed by wars that have disrupted both crude processing and tanker traffic prioritise output of diesel and other products at its expense.
Refined product prices have soared as strikes damage refineries in Russia and the Middle East and curbs on ship traffic choke flows. China has also cut refining capacity and exports to avoid burning stocks.
Refiners opting to produce some of those other products to tap fatter profits has meant fuel oil has been hit harder.
Fuel oil storage levels and prices already reflect the pressure. Stocks are some 30% below three-year seasonal averages in top hubs Singapore, Amsterdam-Rotterdam-Antwerp and Fujairah, data compiled by Reuters shows.
Tightening supply threatens to further raise costs for shipowners and power generators already dealing with war-related disruptions. Higher bunker fuel costs could also in turn feed into shipping rates.
Source: reuters.com