Alkagesta Report: Rhine Logistics Gridlock and Persian Gulf Supply Squeeze Impact Fuel Oil Markets

Alkagesta, an international energy and commodity trading house headquartered in Malta, has published its October 2026 market insights report. The analysis details two simultaneous supply disruptions affecting global fuel oil markets.

In Europe, record-low water levels on the Rhine River have halted barge traffic, forcing major refineries to significantly cut fuel oil loadings. This has left approximately one million metric tonnes stranded at ARA coastal ports, while inland German and Swiss depots face shortages ahead of winter. Swiss heating oil costs rose 8% in September.

Across Asian markets, ongoing friction affecting Persian Gulf crude and feedstock flows, combined with existing constraints in Singapore, is tightening prompt VLSFO availability. Western arbitrage inflows into Singapore are projected to fall, pushing delivered bunker premiums higher. Singapore onshore distillate stocks have declined, and Fujairah residual stocks dropped 30% week-over-week.

The report also notes that demand for high-sulfur fuel oil across South Asia, where buyers are substituting for disrupted LNG supplies, continues to support HSFO crack spreads. Singapore's fuel oil paper trading volume surged over 65% in September.

Both markets are expected to remain in backwardation in the near term. The full report is available on the Alkagesta website.