Haitong Futures: Renewed geopolitical conflict in the Middle East has prevented the resumption of Kuwait’s production and exports, and a tight low-sulfur fuel oil market is expected to persist in the short term.

In the near term, spot supplies are relatively tight—especially with gasoline and diesel premiums, or with diverted supplies of low-sulfur fuel oil components. The renewed geopolitical conflict in the Middle East has also hindered the recovery of Kuwait’s production and exports. A tight market outlook may continue in the short term. However, over the medium term, if the situation in the Middle East becomes relatively controllable, then as Kuwait refineries restart and exports of Sudan’s low-sulfur components increase, the market environment may gradually return to pre-war conditions. Remaining supply capacity for low-sulfur fuel oil would be relatively abundant, while the transition in bunker fuel consumption structure will further erode the low-sulfur fuel oil market share. Overall, the fundamentals may return to a looser state, and market drivers are likely to be weak. (Haitong Futures)
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