A boat passes in front of an oil refinery located on Singapore's Jurong Island March 28, 2009.
Fuel oil margins climbed after U.S. President Donald Trump reimposed a tougher policy on Iran, though trade sources expect a short-lived rally amid unclear supply disruption, while softer China demand and broader tariff concerns weighed on sentiment.
The market, particularly for high-sulphur fuel, has undergone volatile movements this year so far, as trade participants considered mixed drivers and eyed supply uncertainties.
The recent strength in traded margin or crack spread was more of a knee-jerk reaction, a fuel oil trader said, adding that Chinese demand remained a bearish factor.
Singapore's 380-cst high-sulphur fuel oil (HSFO)/Brent crack for March reached a discount of about 70 cents a barrel in Wednesday morning trade, according to market sources.
Cracks compared over 80% higher versus early 2025 when it was at a discount wider than $5 a barrel, based on LSEG data. The front-month value hit a multi-year high in end-January.
HSFO benchmarks have been supported due to risks of tighter logistics after the U.S. imposed broader sanctions on Russia.
However, the strength will remain capped on weaker demand, market sources said. China's fuel oil imports are set to soften due to a hike in the product's import tax this year and lower rebates on purchases.
Concerns on broader tariffs are also adding much volatility to the market, another fuel oil trader said.
Meanwhile, Trump on Tuesday restored his "maximum pressure" campaign on Iran that includes efforts to drive its oil exports down to zero, reimposing Washington's tough policy on the country.
Iranian oil typically moves via a shadow fleet of tankers that conceal their activities to skirt sanctions.
