Asia is forecast to import the highest-ever volume of fuel oil from Russia in March, as disruptions in the Middle East force the market to pivot rapidly.
Sea transport data shows that this flow surged immediately after the US eased part of the sanctions, allowing the consumption of Russian oil trapped at sea for a period of 30 days.
According to shipping tracking firms such as Kpler and LSEG, the total amount of Russian fuel oil poured into Asia this month could exceed 3 million tons, equivalent to about 614,500 barrels/day - an unprecedented number. The main driving force comes from the supply shock when the US-Israel war with Iran caused the vital transport route through the Strait of Hormuz to be almost blocked.
As a result, fuel shipments from the Middle East were disrupted, and many oil refineries in the region were forced to reduce or stop operating. This gap was immediately filled by Russia.
Southeast Asia has emerged as the largest destination, with imports estimated at 1.7-1.9 million tons, mainly docking at Singapore and Malaysia ports. Most of this will be used as maritime fuel, serving the transport fleet that is under pressure from escalating costs.
China ranks second, with 1.2-1.5 million tons. Notably, Russian fuel oil is being used by oil refineries in Shandong province as a substitute for crude oil, amid a sharp decline in supply from the Middle East.
Analysts warn that the impact of disruptions in Hormuz does not stop at finished fuels. The congestion of medium and heavy crude oil flows with high sulfur content has made the entire global oil supply chain more tense.
In the short term, supply from Russia has somewhat "cooled down" the high sulfur fuel oil (HSFO) market, which just peaked with a spot price difference exceeding 76 USD/ton. After Washington's easing move, this level has retreated to around 70 USD/ton.
However, market signals still show that scarcity has not disappeared. The HSFO price structure is currently shifting to a "backwarding" state - spot prices are higher than futures prices - reflecting the current supply shortage.
Experts believe that Russian oil is only "temporary pain relief". If the crisis lasts, this additional amount will not be enough to compensate for the shortage from the Middle East.
Another worrying factor is that many oil refineries in both the Middle East and Asia simultaneously cut capacity due to lack of input materials. This may cause the market to continue to tighten in the coming weeks.
Meanwhile, the congestion in the Strait of Hormuz has not shown signs of being resolved, making the prospect of global crude oil supply more precarious than ever.
