Integr8 Fuels: Diesel tightness puts oil and bunker prices under pressure

By Steve Christy, Expert Contributor, Integr8 Fuels

28 October 2026

Prices are telling us the market is tight  

Crude oil production is increasing as more Middle Eastern volumes make their way back into the market. At the same time, oil demand is much lower than we expected. This begs the question: why are oil prices rising so rapidly, approaching the wartime highs seen in March and April?

It was only four months ago that a US-Iran peace agreement looked imminent, and we and the markets thought the war was about to end. Clearly, that did not happen! Oil prices reflect what is happening in the world, and Brent front-month futures have risen from $70/bbl back then to $90/bbl at the start of September and $115/bbl now. This is an increase that none of us can escape.

Singapore VLSFO prices have followed the same trend, rising from $675/mt in early July to $800/mt in early September and $975/mt currently. That is an increase of $300/mt, or more than 40%.

Oil supply is recovering, but remains below pre-war levels

The US-Iran war led to a 13 million b/d loss in oil supply, which persisted through to May. However, production has been rising since then. Over the past couple of months, increased ship-to-ship operations in the Gulf of Oman have enabled more volumes to be exported from the region. In addition, crude flows through the Saudi East-West pipeline to the Red Sea have rebounded by 1 million b/d, following earlier Houthi attacks on the infrastructure.

As Middle East producers work to diversify their export operations, the supply shortfall has narrowed from 13 million b/d to around 5 million b/d more recently. This represents an 8 million b/d recovery from the lows seen between March and May.

A quick review of the situation in each country shows:

• Saudi Arabia: Crude output losses of around 4 million b/d have narrowed to 2 million b/d.
• Kuwait: Output losses have fallen from 2 million b/d to 1 million b/d.
• Iraq: Output has recovered to near pre-war levels, after an initial loss of 3 million b/d.
• Iran: Output losses have continued.
• UAE: Production and exports have increased since leaving OPEC in May this year.

Oil supply remains around 5 million b/d below pre-war levels. There may be opportunities to increase supply further, but while the war continues, the risk of attacks and further disruptions remains. As a result, the market remains cautious about supply.

Note: The full article by Integr8 can be viewed here. 

Photo credit and source: Integr8 Fuels
Published: 29 October, 2026