Asian utilities are stockpiling fuel oil as natural gas shortages boost demand for dirtier energy alternatives

• Asian utility companies are stocking up on dirtier fuel oil amid natural gas shortages.
• That's due to a slash in Russian gas supplies, leading Europe and Asia to compete for the alternatives left on the market.

Asian utility companies are stockpiling fuel oil as the shortage in natural gas supplies boosts demand for dirtier energy alternatives.

Countries in the region typically see seasonal increases in fuel-oil demand to supplement energy supplies. But in August, Japan's purchases soared to a four-year high while Taiwan and Bangladesh doubled their purchases from last year, Bloomberg reported, citing data from Vortexa.

That's largely been fueled by a slash in Russian gas supplies, leading European and Asian utility companies to compete for the alternatives on the market.

Although natural gas is largely used to generate electricity, fuel oil is used as an alternative. But it's highly pollutive – a sign that countries are setting aside green-energy initiatives to ensure there is enough energy inventory ahead of the winter heating season.

Meantime, other dirty energy sources like coal are also seeing increased demand, according to the International Energy Agency.

But while rich North Asian countries are stocking up on fuel oil, most countries in South Asia have already been pushed out of the natural gas market due to the soaring cost of supplies, and some are already experiencing supply disruptions.

India and Pakistan have been hit with blackouts, with Sri Lanka facing the most severe supply shortage, analysts from S&P Global said.