In the catalytic hydrodesulfurization of residual oil the amount of hydrogen consumed per atom of sulfur removed is relatively low until the desulfurization becomes deep, whereupon the amount of hydrogen consumed per atom of sulfur removed becomes relatively high. The present invention provides a multistage process capable of producing products of low sulfur content while avoiding deep desulfurization of the heavy portion of the residual oil so that hydrogen consumption is diminished. The feed oil is fractionated to provide a residual fraction, a heavy distillate fraction and a light distillate fraction. The residual fraction and hydrogen are charged to an upstream hydrodesulfurization stage. A portion of the upstream stage residual oil effluent stream is split out of the process for use as refinery fuel and the remaining portion of the upstream stage effluent stream is charged to an intermediate hydrodesulfurization stage together with the heavy distillate feed fraction and hydrogen. A portion of the intermediate stage effluent stream is split out of the process as product fuel oil and the remaining portion of the intermediate stage effluent stream is passed to a downstream hydrodesulfurization stage together with the light distillate feed fraction and hydrogen. The downstream stage effluent stream constitutes the final and highest grade product of the process. Because of the combination of segmented feed addition and segmented product removal, not only are residue-containing streams removed from the process at the earliest possible time to avoid overtreating relative to their intended use, but also the removed streams are diluted with a reduced amount of low boiling distillate oil, conserving as much of the low boiling distillate oil as possible for inclusion in the product of the final stage. This method conserves distillate feed oil for the final and highest grade product and allows each hydrodesulfurization stage to be provided with a non-aliquot distillate-residual oil stream which is richer in low boiling distillate oil than its predecessor hydrodesulfurization stage.