The supply crunch stems from a convergence of refinery damage and geopolitical conflict. According to the International Energy Agency, hostilities have disabled approximately 9.6 million barrels of daily refining capacity, while Ukrainian drone strikes on Russian facilities have forced a total ban on diesel exports. These events have decimated global inventories, leaving refiners little choice but to pivot toward diesel to capture record-breaking margins.

Energy Aspects analyst Royston Huan noted that because gasoline and diesel stocks remain at record lows, refiners are incentivized to maximize secondary unit runs. This process consumes fuel oil feedstock, effectively starving the shipping industry of its primary energy source. Rystad Energy analysts anticipate that supply will remain critically tight throughout the third quarter, as the disruption in the Middle East shows no signs of abating. With no immediate incentive for refiners to rebalance their output, the maritime industry faces a sustained period of volatility and potential shortages.