The biggest oil risk is at the bottom of the barrel

There are prospects for abandonment if war in West Asia intensifies

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IN THE OIL industry, fuel oil is known as the bottom of the barrel. It’s typically cheap, unloved,and,crucially,comes from the bottom ofa petroleum-distillation tower — the tall piece of refining kit where crude gets heated and cracked into multiple petroleum products. But the Iran war has turned the industry upside down. Fuel oil is now an ultra-expensive commodity — and that’s bad news for the global economy.

Until now, the energy market has weathered the war shock reasonably well, with oil hovering at around $100 a barrel. But the situation with fuel oil is concerning — and it’s not receiving enough attention. Overshadowed by the other stuff coming higher up from the distillation process — diesel, jet fuel, and, above all, gasoline — fuel oil plays a huge role in the modern world, powering the workhorses of globalisation: container ships.

The problem isn’t just that it’s getting crazy expensive; the real worryis that some key ports may run dry, forcing all kinds of ships, from container vessels to bulk carriers, to halt. The shipping industry, which is typically conservative in its public pronouncements, is sounding the alarm. Vincent Clerc, the chief executive officer of shipping giant AP Moller — MaerskA/S,told French newspaper Le Monde this week: “If we do nothing, we risk ending with dry supply points in Asia.”