Middle East Conflict Tightens Supply – Fuel Oil Price Analysis

By SKYSEVEN Chemical Technical Team · 2026-08-21

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Due to refinery shutdowns in the Middle East caused by the ongoing conflict, global fuel supplies have tightened; consequently, diesel prices in California, USA, have once again breached the $7-per-gallon mark after more than a month.

In the spot market, the conflict-induced refinery shutdowns have tightened global supplies, immediately driving up fuel oil spot prices. On the futures front, the near-month SHFE fuel oil contract (2609) closed up 175 RMB/tonne at 4,295 RMB/tonne on August 19, 2026, while the main contract (2611) rose 97 RMB/tonne to 3,825 RMB/tonne. Open interest surged by 10,615 lots, reflecting a significant increase in long positions; driven by supply-side bullish factors, futures prices are expected to maintain a strong upward direction.

Driven by the tightening global fuel supply, California diesel prices have again surpassed the $7-per-gallon limit. The rise in international refined product prices is expected to transmit to the domestic market, providing strong support to diesel spot prices and likely driving them higher amidst market fluctuations.

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