Indian businesses are facing a fresh logistics cost risk as a global shipping fuel shortage threatens to push up marine fuel prices. Refinery disruptions, weaker fuel oil output and falling traffic through the Strait of Hormuz are adding pressure to an already volatile shipping market.
Global ship fuel shortage puts shipping costs under pressure
The shipping fuel shortage is becoming a growing concern for businesses as refiners affected by geopolitical conflicts prioritise higher-value products such as diesel and gasoline over fuel oil used by ships. Reuters reported on September 7 that the global fuel oil deficit could reach around 218,000 barrels per day in the third quarter of 2026, compared with a shortfall of only about 6,000 barrels per day a year earlier.
The pressure is particularly significant for Asia, where major shipping and bunkering hubs depend heavily on supplies from the Gulf region. Singapore, one of the world’s most important marine fuel hubs, is among the markets exposed to the disruption.
Fuel oil inventories at major bunkering centres including Singapore, Fujairah and the Amsterdam-Rotterdam-Antwerp region are reportedly around 30% below seasonal norms. At the same time, Singapore’s very low sulphur fuel oil prices have risen sharply since the Iran conflict began.
For companies that rely on international shipping, higher bunker fuel prices can eventually feed into freight rates, fuel surcharges and wider logistics bills.
Hormuz disruption adds another layer of risk
The shipping fuel problem is unfolding alongside a sharp decline in commercial vessel traffic through the Strait of Hormuz.
According to shipping data cited by Reuters on September 7, the average number of commodity ships passing through the strategic waterway over the previous 10 days fell to about 10 per day, the lowest level since May. The 10-day average had been above 15 vessels only days earlier.
The Strait of Hormuz is a crucial route for global energy trade, connecting the Persian Gulf with international markets. Any sustained disruption affects not only crude oil supplies but also refined products, shipping schedules, insurance costs and vessel availability.
Oil prices have already responded to the heightened maritime tensions. Brent crude rose to around $97 per barrel on September 7 after last week’s gains, according to Reuters.
For Indian companies, the combination of expensive energy and more difficult shipping conditions could create additional cost pressure across supply chains.
Why Indian importers could feel the impact
India is heavily dependent on international trade for crude oil, industrial inputs, electronics, chemicals, machinery, components and other products. A rise in international shipping expenses does not affect every company equally, but businesses that depend heavily on imported goods can face higher landed costs.
Marine fuel is a major component of operating expenses for container ships, tankers and other commercial vessels. When bunker fuel becomes more expensive, carriers can respond by introducing or increasing fuel-related surcharges.
The effect can then move through the supply chain.
An importer may initially face a higher freight bill. That higher cost can raise the landed price of imported raw materials or finished goods. Manufacturers may then have to decide whether to absorb the increase, reduce margins or pass some of the cost to customers.
This makes shipping fuel prices relevant well beyond the maritime sector.
Indian manufacturers, retailers and exporters could therefore watch freight rates closely if the fuel shortage persists.
Fuel costs could hit exporters and importers differently
The impact on Indian businesses will vary depending on their exposure to global shipping.
Import-heavy businesses could face higher costs when transporting goods into India, particularly where alternative sourcing options are limited. Companies importing specialised components or raw materials may have less flexibility to switch suppliers quickly.
Exporters face a different challenge. Higher freight charges can make shipments more expensive for overseas customers and potentially affect price competitiveness.
Companies with long-term contracts, negotiated freight rates or established fuel surcharge mechanisms may have some protection. Smaller businesses that rely on spot freight markets could be more exposed to sudden changes.
The timing also matters. A temporary increase in bunker prices may be manageable for many businesses. A prolonged shortage combined with higher oil prices, restricted shipping routes and increased insurance premiums would create a much larger cost problem.
Indian rupee adds to the pressure
Higher global oil prices can also create pressure through India’s currency and import bill.
The rupee was trading around 94.42 against the US dollar on September 7, according to Reuters, after the Reserve Bank of India was reported to have intervened in the foreign exchange market as oil prices rose. Brent crude was around $96.8 per barrel at the time.
This matters because international shipping and energy transactions are generally priced in US dollars.
If the rupee weakens while freight and fuel prices rise, Indian importers can face a double impact. The underlying cost increases in dollar terms, while converting those payments into rupees becomes more expensive.
That does not mean every company will immediately raise prices. Businesses can use inventory, hedging, supplier negotiations or margins to absorb some of the increase. But sustained currency and freight pressure can eventually become difficult to avoid.
Logistics companies may face a new cost cycle
The shipping industry is already adjusting to higher fuel expenses caused by the broader energy disruption.
Reuters reported that very low sulphur fuel oil prices in Singapore have risen 76% since the start of the Iran war, compared with a roughly 40% increase in Brent crude over the same period.
Shipping operators have several ways to respond. They can pass fuel costs through surcharges, adjust sailing schedules, optimise routes or seek alternative bunker supplies.
However, rerouting vessels is not cost-free. Longer journeys consume more fuel and require additional sailing time, while disruptions can also affect vessel availability and port schedules.
For Indian logistics operators and freight forwarders, this can make cost estimates harder to maintain, especially for shipments booked weeks in advance.
Asia faces particular exposure to the fuel shortage
Asia is expected to be one of the regions most exposed to the developing fuel oil shortage because of its dependence on Gulf oil flows and the importance of Singapore as a global bunkering centre.
The region also plays a central role in global manufacturing and container shipping.
That creates a potential chain reaction. Higher marine fuel costs can increase the cost of moving components into Asian manufacturing hubs and finished products out to international markets. Companies that operate complex regional supply chains may therefore have to reassess shipping budgets.
India’s proximity to major Gulf energy suppliers provides some logistical advantages compared with more distant markets, but it does not shield Indian businesses from global marine fuel prices.
If Asian bunker prices remain elevated, Indian companies could face higher shipping bills even when their own routes are not directly affected by the conflict.
Businesses will watch oil and shipping data closely
The immediate outlook depends heavily on how long the disruption lasts.
The shipping fuel shortage is being driven by several factors at once, including refinery disruptions, reduced fuel oil production and geopolitical risks affecting crude and tanker movements. Reuters estimates that the global fuel oil deficit could reach 218,000 barrels per day in the third quarter.
A reduction in tensions could allow shipping traffic through Hormuz to recover and ease some of the pressure on energy markets. A prolonged disruption could have the opposite effect.
For Indian businesses, the key indicators will include Brent crude prices, bunker fuel prices in Asian hubs, container freight rates, vessel traffic through Hormuz and the rupee-dollar exchange rate.
Companies with large international supply chains may increasingly factor fuel volatility into procurement and logistics planning.
The bigger concern is how long the pressure lasts
The immediate issue for Indian businesses is not simply that shipping fuel has become more expensive. The bigger concern is whether several cost pressures remain elevated at the same time.
Higher bunker fuel prices, expensive crude, weaker vessel traffic through Hormuz, currency volatility and possible freight surcharges can reinforce one another.
For now, the shipping fuel shortage is a developing risk rather than proof that every Indian business will see a sharp logistics cost increase. The impact will depend on shipping routes, contracts, fuel exposure and the duration of the disruption.
But with global fuel oil supplies tightening and maritime traffic through Hormuz falling sharply, companies involved in international trade have a clear reason to keep logistics costs on their radar.
Key Takeaways
- Global fuel oil supplies are tightening as refiners prioritise diesel and gasoline production.
- The global fuel oil deficit could reach about 218,000 barrels per day in the third quarter of 2026.
- Lower shipping traffic through the Strait of Hormuz is adding pressure to oil and marine fuel markets.
- Indian importers and exporters could face higher freight costs if the disruption persists.
FAQ
Why is there a global shipping fuel shortage?
Refinery disruptions linked to geopolitical conflicts are reducing fuel oil production. Refiners are prioritising products such as diesel and gasoline, creating tighter supplies of fuel oil used by ships.
How could the shortage affect Indian businesses?
Higher bunker fuel prices can increase shipping costs and fuel surcharges. Indian importers could face higher landed costs, while exporters may have to deal with more expensive international freight.
Why is the Strait of Hormuz important for shipping costs?
Hormuz is a major route for global energy shipments. Falling vessel traffic through the strait can disrupt oil and refined-product flows, increasing concerns about fuel availability, freight rates and shipping risks.
Will Indian consumers immediately see higher prices?
Not necessarily. Businesses may initially absorb higher logistics costs or use existing contracts and inventory. Consumer prices are more likely to come under pressure if higher freight, fuel and import costs persist for an extended period.
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