The Iran conflict has disrupted fuel markets for shipping, forcing distributors in Singapore—the world's top bunkering hub—to slash purchases. Distributors are holding back larger orders due to extreme price volatility, creating a perception of tightness in the local market. Several distributors are now rationing stock and prioritizing preferred customers, with some canceling sales as they wait for more stable conditions.

Fuel costs have skyrocketed in recent weeks. Very-low sulfur fuel oil prices in Singapore have more than doubled since February 27, while marine gasoil has surged 160%. These increases far outpace crude oil's 40% rise during the same period. Despite adequate wholesale supply by historical standards, distributors are becoming stricter with timing and quantity conditions, threatening cancellations for delayed deliveries.

The price volatility threatens to drive up inflation as shipping costs feed through to food and other goods. While Singapore's bunker supply comes from multiple sources, middle distillate fuel stockpiles are at their lowest since November 2022. The Maritime and Port Authority maintains adequate supply exists for current demand, but distributors remain cautious as the Strait of Hormuz disruption continues to roil global shipping fuel markets.