Why is HSFO trading above crude in Singapore?

OilPrice.com attributes it to disrupted supply from the Middle East and Russia, resilient bunker demand and prohibitive freight rates. Together these leave too few affordable cargoes to meet demand at Singapore.

Could the squeeze ease before year-end?

Possibly. The report points to seasonal relief from Gulf producers and additional Chinese export allowances, especially for VLSFO. It cautions that expensive replacement cargoes and vulnerable Russian supply could slow any normalisation.

Shipowners and charterers on Asian routes pay more for bunkers. Where costs are passed on, that adds to the freight and trade costs of Asian cargo, a point the OilPrice.com report makes.

HSFO Above Crude: Asia's Shipping-Fuel Squeeze

Singapore's high-sulphur bunker fuel is reportedly pricing above the crude it comes from. Seasonal Gulf supply may ease it, but not for certain.

High-sulphur fuel oil trading above the crude it is made from is a sign of a supply squeeze, not a refining windfall. Per OilPrice.com, disrupted Middle East and Russian cargoes, firm bunker demand and costly freight lifted HSFO in the Singapore bunker market; relief may come late in the year.

The Gulf Barrel Desk October 26, 2026 Updated October 26, 2026 · 3 min read

OilPrice.com reports that HSFO in Singapore now trades above the price of the crude used to make it, an unusual inversion for a residual refinery product.
The reported drivers are disrupted Middle East and Russian supply, resilient bunker demand and freight rates high enough to make replacement cargoes expensive.
Seasonal relief from Gulf producers and extra Chinese export allowances could ease the squeeze toward year-end, most plausibly for VLSFO.
Russian supply remains vulnerable to further disruption, so a return to normal spreads is not assured.
This is analysis, not trading advice. The spread figures come from the cited report and have not been independently verified here.

Asia's shipping-fuel market is carrying an anomaly. According to OilPrice.com, high-sulphur fuel oil in Singapore now trades above the price of the crude used to produce it. A residual product normally sells at a discount to its feedstock. This inversion is therefore a signal of scarce deliverable supply, not of strong refining economics. The desk could not independently confirm the spread, so the figures here rest on that report.

What is squeezing supply

The reported cause is a stack of constraints rather than one shock. OilPrice.com cites disrupted supplies from the Middle East and Russia, bunker demand that has stayed resilient, and freight rates described as prohibitive. The last point matters most for the mechanism. If moving a replacement cargo into Singapore costs more than the product is worth at origin, buyers cannot arbitrage the gap away, and the local price stays elevated.

Where relief could come from

The report identifies two possible sources of easing toward year-end: seasonal relief from Gulf producers and additional Chinese export allowances. It says both would help most for very-low-sulphur fuel oil. This is an expectation, not a confirmed flow. Neither adds volume until cargoes are loaded and shipped, and the report notes that expensive transport can blunt the effect on the high-sulphur grade.

Why a quick normalisation is not assured

Russian supply is the main swing factor. OilPrice.com describes it as vulnerable to further disruption, so any seasonal improvement could be offset. A December 2025 S&P Global outlook had expected bunker demand to support Asia's HSFO market in 2026 while ample supply capped major upsides. The current inversion shows how far conditions have moved from that baseline, which is itself a reason to treat the picture as fluid.

Who pays and what to watch

Shipowners and charterers on Asian routes bear the cost first, and the report frames it as another layer added to Asian trade costs. The indicators to watch are the HSFO-to-crude spread in Singapore, Gulf and Chinese export volumes, freight rates for fuel oil cargoes, and any new disruption to Russian flows. This is analysis, not trading advice.

Why is HSFO trading above crude in Singapore?: OilPrice.com attributes it to disrupted supply from the Middle East and Russia, resilient bunker demand and prohibitive freight rates. Together these leave too few affordable cargoes to meet demand at Singapore.
Could the squeeze ease before year-end?: Possibly. The report points to seasonal relief from Gulf producers and additional Chinese export allowances, especially for VLSFO. It cautions that expensive replacement cargoes and vulnerable Russian supply could slow any normalisation.
Who bears the cost?: Shipowners and charterers on Asian routes pay more for bunkers. Where costs are passed on, that adds to the freight and trade costs of Asian cargo, a point the OilPrice.com report makes.

Fuel Oil Becomes Asia's Next Cost Shock — OilPrice.com
Commodities 2026: Bunker demand to buoy Asia's HSFO market, ample supply likely to cap major upsides — S&P Global Commodity Insights