APPEC 2026: Equatorial and Kuwait Petroleum Corporation discuss Middle East bunker market dynamics

Representatives of Singapore bunker supplier Equatorial Marine Fuel Management Services (Equatorial) and Kuwait state-owned oil company Kuwait Petroleum Corporation (KPC) met to discuss how developments in the Middle East affected bunker market dynamics at APPEC 2026 on Thursday (10 September).

Choong Sheen Mao, Chief Operating Officer, Equatorial and Dr Salah Al-Awadhi, Team Leader Market Research, KPC were speaking at the Fireside Chat: Assessing Fuel Oil Trends and Resilience in Bunker Markets moderated by John Morley, Global Director, Crude and Fuel Oil Markets, S&P Global Energy.

Equatorial Marine Fuel Management Services

The conversation saw Mr Choong identifying geopolitical events have distorted the East–West arbitrage, creating a volatile environment where market speculation – specifically regarding the potential reopening of the Strait of Hormuz – heavily influenced price movements.

He highlighted a “price ceiling” phenomenon where demand destruction occurred once prices reached certain thresholds.

Consequently, the development caused the industry to shift away from long-term planning toward short-term business strategies to navigate the heightened geopolitical volatility.

Regarding supply, Mr Choong noted while replacement barrels were theoretically available, commercial realities often prevented them from entering the market if price differentials were unattractive to customers.

He observed while ceasefire agreements between warring parties at the Strait of Hormuz initially brought large quantities of oil to the market, supply constraints subsequently re-emerged.

Kuwait Petroleum Corporation

Dr. Salah, meanwhile, characterised the 2026 marine fuels market as having evolved from an initial surplus of fuel oil – where prices hovered around USD 500 pmt – to a period of extreme volatility driven by geopolitical shocks.

The initial war shock in the Middle East region pushed fuel oil prices to USD 1,140 pmt, followed by sustained highs when conflict in the region spread to involve several oil and gas facilities, and a subsequent USD 300 to 400 pmt drop following US–EU relief efforts.

Dr. Salah pointed out the market is currently in a “sustained crisis” phase, reacting daily to positive and negative signals.

Looking ahead, he emphasised high uncertainty has made price forecasting unfeasible, as the market has been operating outside of ideal fundamental assumptions. Despite this, he expects HSFO and VLSFO to remain the dominant bunker fuels for the next 5 to 10 years.

Supply-wise, Dr. Salah noted while the Strait of Hormuz remains open, however it is currently unsafe for passage. This has resulted in a 70% reduction in regional fuel oil outflows, dropping from approximately 800,000 barrels per day to 200,000 barrels per day.

He argued moving forward, there are no adequate replacement barrels available due to three primary factors:

• Supply/Demand Fundamentals: Inflows from Russia have dropped by 45 to 50% due to infrastructure attacks, regional refinery interflows are insufficient to cover the losses, and the traditional West-to-East arbitrage is currently non-viable.
• Seasonality: During the summer, the Middle East region consumes a significant portion of its fuel oil locally for power generation, further reducing export availability.
• Profitability: Elevated cracks for middle distillates have incentivised the diversion of bunker fuel oil feedstock into middle distillate production, further tightening supply.

Photo credit: Manifold Times
Published: 14 September 2026