Fuel Oil Recent Commodity Market Dynamics Intelligence, Analysis, and Forecast

I. Market Dynamics Intelligence
(A) Price Trends
1. Futures Market
- On May 25, 2026, the continuously traded front-month fuel oil futures contract declined by 5% intraday to RMB 3,914.00 per ton.
- On May 21, the front-month fuel oil futures contract closed at RMB 4,154.00, up 0.83% from the previous day; the weighted average fuel oil price fell by 3.14%; the fuel oil contract for January 2027 (FU2701) closed at RMB 3,710.00, up 1.06%; the February 2027 contract (FU2702) closed at RMB 3,623.00, up 0.47%; the March 2027 contract (FU2703) closed at RMB 3,593.00, up 1.21%; and the April 2027 contract (FU2704) closed at RMB 3,540.00, up 1.32%.
- On May 18, the front-month fuel oil futures contract opened at RMB 4,060.00 and closed at RMB 4,120.00, with an intraday high of RMB 4,085.00 and a low of RMB 4,015.00—down RMB 51.00, or 1.24%, from the prior day’s close.

2. Spot Market
- On May 21, spot quotations for China National Fuel (CNF) branded fuel oil varied across regions. In Shanghai: RMB 5,950/ton for 180 CST and RMB 6,050/ton for 120 CST; in Ningbo: RMB 5,800/ton for 180 CST and RMB 5,850/ton for 120 CST; in Zhoushan: RMB 5,800/ton for 180 CST and RMB 5,900/ton for 120 CST; in Qingdao: RMB 6,650/ton for 180 CST; in Zhanjiang: RMB 5,700/ton for 180 CST; in Guangzhou: RMB 5,700/ton for 180 CST; in Qinhuangdao: RMB 5,750/ton for 180 CST and RMB 5,800/ton for 120 CST; in Zhuhai: RMB 5,800/ton for 180 CST and RMB 5,900/ton for 120 CST; in Dalian: RMB 6,250/ton for 180 CST and RMB 6,350/ton for 120 CST; in Tianjin Port: RMB 6,400/ton for 180 CST; and in Hebei’s four major ports: RMB 6,400/ton for 180 CST.

(B) Market Influencing Factors
1. Geopolitical Factors
- On May 25, former U.S. President Donald Trump stated, “The U.S.–Iran agreement is not yet fully finalized but is progressing,” while the White House added that “an agreement may be reached within days.” The market interpreted this as signaling a potential resumption of navigation through the Strait of Hormuz and possible lifting of restrictions on Iranian crude oil and fuel oil exports. Previously, from April to May, Middle East hostilities had caused a sharp 68% decline in high-sulfur fuel oil exports from the region, placing sustained upward pressure on fuel oil prices due to elevated geopolitical risk premiums. Now, with expectations reversing, capital has rushed to liquidate positions, accelerating the downward price momentum.

2. Supply Conditions
- From Singapore’s perspective, low-sulfur fuel oil arbitrage cargo arrivals from Western markets declined markedly in April and are expected to fall further in May. Following drone strikes by Ukraine against Russian oil infrastructure over the past month, high-sulfur fuel oil supply from Russia into the market is expected to tighten in May. Moreover, as the East–West price differential for 380 CST high-sulfur fuel oil—initially widened sharply following the outbreak of Middle East hostilities—has now narrowed, arbitrage inflows of high-sulfur fuel oil from the Americas into Singapore are also projected to decrease in May. Overall, Singapore’s total fuel oil supply is expected to tighten further in May.

3. Demand Conditions
- Regarding shipping demand: Singapore’s total marine fuel sales in March 2026 amounted to 4.765 million metric tons (MMT), up 1.94% month-on-month (m/m) and 6.62% year-on-year (y/y). Traditional marine fuel oil sales totaled 4.624 MMT, up 2.37% m/m. Persistent tensions in the Middle East during March—including closure of the Strait of Hormuz and multiple tanker attacks in the Persian Gulf and Gulf of Oman—prompted the International Maritime Organization (IMO) to urge shipping companies to avoid conflict zones. Major carrier Maersk rerouted all its vessels operating on Middle East–to–India, Mediterranean, and U.S. East Coast routes around Africa’s Cape of Good Hope. Longer voyages stimulated marine fuel demand, and some vessels opted to anchor near Singapore to await scheduling adjustments, optimize routing, and replenish fuel—making Singapore a critical node for vessel waiting, route optimization, and refueling. However, buyer caution emerged in the second half of March, leading to a mild cooling in bunkering demand. With ceasefire negotiations still ongoing, uncertainty remains high: if talks proceed smoothly and the Strait of Hormuz fully reopens, Singapore’s marine fuel demand could increase; conversely, if geopolitical tensions escalate again, demand may remain at current levels. Overall, Singapore’s fuel oil demand in May is expected to trend modestly upward.

II. Analysis and Assessment
(A) Short-Term Analysis
In the short term, fuel oil prices have fallen sharply due to weakened cost support driven by expectations of U.S.–Iran negotiations. Geopolitical uncertainty remains elevated: if negotiations yield substantive progress and the Strait of Hormuz resumes full operations—enabling increased Iranian crude and fuel oil exports—fuel oil prices would likely face further downward pressure. Conversely, if negotiations stall and regional tensions reignite, supply concerns could trigger a price rebound.

(B) Medium- to Long-Term Analysis
From a medium- to long-term perspective, the overall tightening of supply may provide some price support. Singapore’s fuel oil supply is expected to decline in May across Western, Russian, and American sources. If demand remains stable or improves incrementally, fuel oil prices may stabilize and gradually recover after a period of volatility. However, broader macroeconomic conditions, monetary policy, and environmental regulations will also influence both fuel oil supply and demand—and thus affect price trajectories.

III. Forecast
(A) Price Trend Forecast
In the short term, fuel oil prices will continue to be dominated by geopolitical developments, resulting in potentially heightened volatility. Should U.S.–Iran negotiations achieve tangible progress, prices may continue declining; should negotiations falter, prices may rebound. Over the medium to long term, as supply constraints become more pronounced, fuel oil prices may gradually rise—provided demand cooperates—but the magnitude of any recovery will be contingent upon global economic conditions and policy developments.

(B) Supply–Demand Forecast
On the supply side, global fuel oil supply may see a short-term uptick amid U.S.–Iran negotiation optimism, but medium- to long-term supply is expected to remain tight due to reduced low-sulfur fuel oil arrivals from Western markets, tightening Russian supply, and diminished arbitrage inflows from the Americas. On the demand side, shipping-related demand may fluctuate in the short term due to geopolitical uncertainty, but over the medium to long term, gradual global economic recovery is expected to sustain steady-to-incremental growth in shipping activity—and thereby boost fuel oil demand.