Shipping industry fears fuel shortages as Iran war squeezes bunker fuel
supply
[May 12, 2026] By
ANTON L. DELGADO and CHAN HO-HIM
BANGKOK (AP) — Ship operators rely on a sludgelike substance known as
bunker fuel to keep vessels running. The Iran war 's closure of the
Strait of Hormuz has choked off the supply of this fuel that powers the
global maritime industry and its largest refueling hub in Asia.
Bunker fuel is a literal bottom of the barrel product — heavier and
dirtier than the more expensive kinds of refined crude oil used by other
vehicles like cars and airplanes — it sinks to the bottom of storage
containers.
But it helps move the 80% of globally traded goods that are transported
by sea, and experts say that means a shortage of bunker fuel will
translate to higher shipping costs, increase consumer prices and hurt
the bottom lines of businesses worldwide.
That will be an issue first in Asia, which relies heavily on Middle
Eastern oil. In Singapore, the world’s biggest refueling hub for bunker
fuel, reserves are dwindling and prices are spiking.
Shipping companies are trying to adapt to the energy shock, reducing
vessel speeds and revising schedules to cut costs in the short term
while making plans to acquire ships that can run on alternative fuels.
But some companies won’t survive this triage for long, according to
Henning Gloystein of the Eurasia Group consultancy firm, who warned that
the pain will spread beyond Asia through global supply chains.
Southeast Asia turns to ‘energy triage’
Asia, which was hit first and hardest by the energy shock, has adopted
various forms of “energy triage " to cope, increasing its use of coal,
buying more crude oil from Russia and reviving plans to develop nuclear
power.
But Asia is bracing for further impacts as energy reserves dwindle and
government subsidies dry up.
More than half of global seaborne trade moved through Asian ports in
2024, according to United Nations data, so what happens there will have
global consequences.
For now, Singapore's supplies of bunker fuel have held up even as the
price races up.
But the prolonged cutoff from major sources of the heavier crude oil
needed for bunker fuel, like Iraq and Kuwait, will cause shortages, said
Natalia Katona of the commodity site OilPrice.
“We just see the price in Singapore going up, up, up,” Katona said.
Before the war, bunker fuel in Singapore cost about $500 per metric ton
($450 per U.S. ton). That went up to more than $800 ($725 per U.S. ton)
as of early May.
Fuel shortages drive consumer costs
Shipping companies are absorbing the brunt of the costs for now, said
June Goh, an oil analyst for market intelligence firm Sparta
Commodities, but this may soon "pass on to the customers.”
The daily cost of the Iran war for the global shipping industry is 340
million euros (nearly $400 million), according to the European
Federation for Transport and Environment.
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A view of the Port of Singapore Authority's Pasir Panjang
Terminal is pictured on July 25, 2023. (AP Photo/Anton L. Delgado,
File)
 “Bunker fuel shortages tend to feed
through to shipping costs more quickly than many other cost
pressures,” said Oliver Miloschewsky of risk consultancy firm Aon.
Individual product impact may appear incremental but the cumulative
effect of higher shipping costs “can ripple across supply chains and
ultimately influence consumer prices across a broad range of
sectors," he said.
Singaporean consumers are also feeling the pinch in other ways as
local ferries increase fares and luxury cruise liners tack on fuel
surcharges.
Ship operators face limited options
Shippers have limited choices to deal with the situation,
Miloschewsky said. They can pay more for fuel or implement
fuel-saving measures like slowing shipping or suspending voyages.
The average speed of bulk carriers and container ships has slowed
globally by around 2% since the war began on Feb. 28, industry group
Clarksons Research reported.
High prices are also driving more interest in green fuels, said
Håkan Agnevall of marine and energy technology manufacturer
Wartsila.
The good news is the technology to create lower-emitting fuels
exists, he said. The bad news is production isn't yet at scale and
greener fuels are often more expensive.
Though U.S. President Donald Trump derailed efforts to shift global
shipping away from fossil fuels in 2025, Agnevall said the current
conflict could prompt strategically minded companies and countries
to renew their push toward greener alternatives.
Rising fossil fuel prices are narrowing the cost gap. “That improves
the business case for green fuels,” he said.
The Caravel Group owns one of the world’s largest ship management
companies, Fleet Management Limited, which oversees more than 120
shipbuilding projects.
About a third of ships that the company is managing the construction
of will be “dual fuel capable,” meaning they can run on both
conventional bunker fuel and alternatives such as liquified natural
gas, CEO Angad Banga told The Associated Press.
Ship owners are willing to pay a premium to have vessels that can
switch between fuels because “in a volatile environment optionality
has a measurable economic value,” he said.
Alternative fuels are not yet as flexible as conventional fuel
bunkering, Banga said. While there are more than 890 LNG-fueled
vessels in operation globally, a lack of supporting infrastructure
has created bottlenecks for them.
But the industry is catching up and limits on bunker fuel are
driving even more interest in LNG-capable ships, he said, “that
progress is real."
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Chan reported from Hong Kong.
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