Fuel Switch Snapshot: Hormuz closure sends bunker prices soaring in major ports

Hormuz disruption sends ripples through B100, LBM prices

Rotterdam’s B100 shifts to premium over VLSFO

LNG at heavy discounts to LSMGO in Singapore

The closure of the Strait of Hormuz amid the escalating Middle East conflict and supply disruptions across the region has pushed conventional and gas bunker fuel prices sharply higher over the past week.

Singapore's and Rotterdam’s HSFO and VLSFO prices have tracked a drastic surge in the front-month ICE Brent contract (+$173/mt) and LSMGO prices have climbed even higher on a jump in low-sulphur gasoil futures (+$479/mt).

The shock has rippled across alternative fuels as well.

Biofuels and liquefied biomethane (LBM) prices have also surged, with the EU compliance costs further reshaping bunker economics in major ports.

Rotterdam’s B100 has flipped to a $14/mt premium over VLSFO from a $289/mt discount, and to a $53/mt premium over HSFO from a $239/mt discount in the past week.

B100’s discounts to LNG in Rotterdam have narrowed by $178–195/mt to $17–217/mt, depending on the vessel’s engine type.

LNG has also reversed course. The fuel has flipped to a $31/mt premium over VLSFO from a $94/mt discount when bunkered in diesel slow-speed engines with low methane slip.

At the same time, its discount over LSMGO has widened by $54/mt to $350/mt for diesel slow-speed engines.

Liquid fuels

Rotterdam’s conventional bunker fuel prices have jumped by $197–376/mt over the past week. The port’s B30-VLSFO price has also surged by $222/mt.

Rotterdam’s B100 price has spiked by $501/mt, largely tracking a rise in the ARA region’s POMEME price. Prima-assessed ARA POMEME barge prices increased $82/mt over the same period.

Singapore’s B100 price has also climbed by $291/mt, with a $40/mt rise in China’s UCOME barge prices adding further upward pressure.

EU compliance costs have added further pressure.

OceanScore-assessed FuelEU pooling values fell by $26/mtCO2e over the past week, cutting B100’s potential pooling value by $70/mt to $624/mt. A stronger US dollar has also raised the cost of EU ETS penalties priced in euros.

Liquid gases

IMF Portwatch data shows that just one tanker passed through the Strait of Hormuz on 5 March, down from 11 on 1 March and much below the peak of 73 recorded on 22 February. And gas bunker markets have reacted sharply to the disruption as well.

Rotterdam’s LNG bunker prices have surged $306–322/mt over the past week, while LBM prices have climbed even more steeply by $448–464/mt.

LNG’s premiums over LBM in Rotterdam have narrowed by $142/mt each to $401–407/mt, depending on the engine type.

Singapore’s LNG bunker prices have gained $372–380/mt.

LNG’s discounts to LSMGO have widened significantly in both Rotterdam and Singapore.

Rotterdam’s LNG has become more affordable against its LSMGO, with the spread widening by $54–70/mt to $149–350/mt over the past week.

In Singapore, LNG’s discounts to LSMGO have widened by a striking $750–758/mt to $894–995/mt, depending on the engine type.

"With Qatari LNG production curbed and Iranian attacks on major infrastructure, Asian buyers scrambled to replace cargoes, pushing prices to new highs," Andy Soomer, bunker supplier Axpo Group's head of fundamental analysis said.

"A prolonged interruption will likely drive prices higher to trigger demand destruction and ensure European gas inventories are refilled," Soomer added.

By Konica Bhatt

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