Marine fuel market participants in the Middle East's bunkering hub of Fujairah are cautiously optimistic and a little anxious about what will happen now the US and Iran have agreed to ease regional tensions.
As part of the agreement, the US has allowed unlimited sales of Iranian crude and refined products, which could see a return of Iranian high-sulphur fuel oil (HSFO) to Fujairah.
While this offers a potential path to normalisation of the trading environment, which has been heavily affected by shipping disruptions in the strait of Hormuz, local traders, suppliers, and buyers remain somewhat sceptical about the timeline, enforcement, and practical implementation of agreed actions.
Iran had been a key supplier of HSFO to Fujairah, accounting for 25pc of all imports, or 70,000 b/d, in 2025, oil analytics firm Vortexa's data show.
These supplies were cut off as relations between the UAE and Tehran deteriorated. During the war, Iran repeatedly attacked Fujairah's infrastructure, with Tehran accusing the UAE of collaborating with the US and Israel.
Some bunker suppliers cannot see the return of stable trade, at least in the near future.
"We are hopeful, but there is anxiety in the market that relations have received too much damage," a senior Fujairah-based bunker supplier said. "Everything hinges on how bilateral diplomatic relationships between the UAE and Iran navigate this transition phase."
Others said the economic benefits of the trade will help to overcome difficulties in bilateral relations. But, in the post-sanction period, the fuel will not be as cheap as before, they said.
Even if sanctions are smoothly lifted, local suppliers anticipate intense competition for Iranian straight-run HSFO from Asian refiners with upgraded secondary processing units, which will be eager to secure supply as a highly economical cracking feedstock.
"Fujairah won't be the only buyer in town once the Iranian HSFO is freed from shackles," a regional fuel oil trader said. "Once those barrels are fully legitimised and the banking channels clear, big players will return to feed the appetite of massive, sophisticated refining complexes across Asia.
"The resulting premium structure could easily price local bunker blenders right out of the market," the trader said.
For the very low-sulphur fuel oil (VLSFO) sector, Fujairah's supply recovery remains heavily reliant on consistent product flows from Kuwait's 615,000 b/d al-Zour refinery. Shipments from the plant will be capped, at least until late in the third quarter.
"The region is entering a peak summer demand period and Kuwaiti domestic power utilities will inevitably prioritise burning low-sulphur fuel oil for electricity and air conditioning over exporting it," said a bunker trader.
Combined with lingering security anxieties regarding transits through the strait of Hormuz, the Fujairah market is not factoring in prompt VLSFO supply from al-Zour anytime soon.
Fujairah VLSFO premiums against Singapore cargo benchmarks hit unprecedented highs of $700/t earlier in June, due to an acute local product shortage.
Premiums fell ahead of an arrival of a 100,000t low-sulphur fuel oil cargo from Nigeria's Dangote on 20 June, with more suppliers emerging with offers for end-June. But premiums remain above $300/t, because there have been sharper falls in the Singapore cargo benchmark price and freight netbacks remain high. In normal market conditions, the VLSFO bunker premium is in a range of $5-15/t.
