Fuel oil is a heavy petroleum product derived from crude oil refining, primarily used for power generation, marine fuel, and industrial heating applications. Different grades include low-sulfur fuel oil (LSFO) and high-sulfur fuel oil (HSFO), with environmental regulations increasingly favoring cleaner, lower-sulfur variants. Fuel oil markets are influenced by refining economics, environmental regulations, and power generation demand.

International Maritime Organisation (IMO) regulations limiting sulfur content in marine fuels have significantly impacted fuel oil markets, creating price differentials between compliant and non-compliant grades. Fuel oil trading involves complex quality specifications, delivery logistics, and regional supply-demand variations. The product serves as both a refining byproduct and essential energy source for specific applications.

Real-world example: IMO 2020 sulfur regulations cause high-sulfur fuel oil prices to collapse from $400 to $200 per ton while low-sulfur marine fuel premiums surge, forcing ship operators to install scrubber systems or switch to cleaner fuels.