On February 26, the main fuel oil contract 2605 surpassed the 3,000-point mark, rising over 2%. Geopolitical risk premiums are evident, with Iranian high-sulfur exports constrained due to intensified U.S. sanctions since January. High-sulfur fuel oil shipments in February continued the weak trend from January, widening the supply gap in Asia. Additionally, four years into the Russia-Ukraine conflict, Western sanctions have intensified since late last year, restricting high-sulfur fuel oil exports from two key Russian producers. Exports fell over 17% month-on-month in the first month after sanctions were imposed. Ongoing Ukrainian attacks on Russian refineries have further worsened export data to Asia. As the U.S. and Iran enter a third round of indirect talks, capital is betting on geopolitical risk premiums in fuel oil. Short-term market focus remains on the latest developments in U.S.-Iran relations and their impact on crude oil and fuel oil markets.

Data indicates that Middle Eastern high-sulfur shipments in February are projected at 3 million metric tons, down 1.13 million tons month-on-month and 500,000 tons year-on-year. Iran’s shipments saw a significant decline, with February volumes around 900,000 tons, falling 200,000 tons from the previous month and over 400,000 tons compared to the same period last year. Although Russia’s high-sulfur shipments decreased month-on-month in February, they remained high compared to the previous year.