Huatai Futures: The fuel oil market is tightening due to logistics disruptions, with limited Russian supplies exacerbating market shortages

In terms of fuel oil’s own fundamentals, due to the disruption of strait logistics, the market is showing a tightening trend, and both the high- and low-sulfur month spreads and the crack spreads are being supported. For the Middle East shortfall, the fuel oil supply replenishment worth watching comes from Russia. Based on reference shipping schedule data, Russia’s March high-sulfur fuel oil dispatch volume is estimated at 2.61 million tons, up 240k tons month-over-month, but down 140k tons year-over-year. Due to the continued drone attacks on Russian refineries and ports by Ukraine, the Ust-Luga port has recently suspended loading because of an attack. This port is Russia’s main dispatch port for fuel oil exports (monthly export volumes exceeding 1 million tons). Therefore, damage to infrastructure has constrained the growth potential of Russian supply and may also amplify the fuel oil market shortfall.( )