The shortage of high sulfur fuel oil persists because refiners are prioritizing the production of higher margin diesel and gasoline. Global supplies have dropped by 1.8 million tonnes per month, stemming from Ukrainian drone strikes that removed 1 million tonnes from Russian refineries and 800,000 tonnes lost from Persian Gulf exports. Goldman Sachs indicates that Gulf producers may be forced to discount crude sales to Asia, while North Asian refiners will import more fuel oil in November as winter approaches.
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Crude Shipping Costs Hit $20 a Barrel After Fuel Price Spike
Commodities6 days ago
Goldman Sachs analysis found that the expense of transporting oil across oceans has surged nearly sevenfold over the past 12 months. The firm reports that moving a single barrel of crude now costs more than $20, up from $3 a year ago, with ship fuel contributing $4 per barrel to that increase as Singapore marine fuel prices rose to $919 a tonne from $428. Additional costs include a $7 war risk premium for the Strait of Hormuz and expenses related to tanker rerouting and ship to ship transfers.
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