The Week in Alt Fuels: B100 discount to LSMGO blows out after Iran shuts Hormuz

The Iran war has sent oil prices flying and biofuel prices less so, but don't forget to adjust for emission costs when you compare fuels for EU voyages.

The bunker fuel prices in the chart have been adjusted for calorific contents to become VLSFO-equivalents. They either have various estimated levels of EU ETS and FuelEU Maritime costs and potential pooling values in 2026 excluded ("Rotterdam" and "Singapore"), or included ("Rotterdam to non-EU port", "Rotterdam to EU port" and "Singapore to EU port"). ENGINE

Several shipping companies have suspended vessel transits through the Strait of Hormuz amid the ongoing war in the Middle East, sharply slowing traffic through one of the world’s most critical oil and gas chokepoints.

IMF Portwatch data shows that daily tanker transits through the strait dropped to just 11 on 1 March, 62 fewer than the peak of 73 recorded on 22 February.

With major shipping lines suspending Hormuz transits and several global marine insurers withdrawing war risk coverage for Gulf waters, traffic through the waterway could remain choked.

Brent crude has already reacted sharply to oil flow disruptions through the Strait of Hormuz. The front-month Brent benchmark has surged past $91/bbl, up by an astounding 25% from $72/bbl at the end of last week. Crude market analysts have warned that a prolonged disruption in the key shipping corridor could send Brent towards $100/bbl.

The rally has quickly filtered into bunker markets. Conventional fuel prices in major bunkering hubs, including Rotterdam, have surged over the past week.

Rotterdam’s outright VLSFO and LSMGO prices have shot up by $158/mt and $368/mt over the week. The sharp rise in conventional fuel costs seems to be prompting suppliers to promote biofuel alternatives more aggressively, a source told ENGINE.

The outright price of ZRE-rebated advanced B100 in Rotterdam has gained by $143/mt, which is slightly less than VLSFO and much less than LSMGO.

But outright prices only tell part of the story.

In practice, a more accurate comparison requires adjusting bunker prices on an energy-equivalent basis and including emission costs for voyages between EU-EU ports.

When bunker prices are adjusted for calorific contents to create VLSFO-equivalent values, and estimated EU ETS costs and FuelEU pooling values for a Rotterdam–EU voyage in 2026 are included, Rotterdam’s B100 price has increased by a greater $179/mt over the past week.

A weaker EUR/USD exchange rate and a drop in the FuelEU Maritime compliance surplus market have contributed to push the regulation-adjusted B100 price up more than its outright version.

Meanwhile, energy- and regulation-adjusted VLSFO and LSMGO prices have moved up roughly in line with their outright versions.

This example shows that you have to look beyond outright prices to gauge the real cost changes for various bunker fuels.

In the price table at the top, we can see that Rotterdam's B100 is still comfortably the most cost-efficient liquid fuel option for vessels on EU-EU voyages pooling their FuelEU Maritime compliance surplus. Under these conditions, its discount to LSMGO has blown wide open this week, from $373/mt to $541/mt.

In other news this week, bunker supplier Burando Energies has expanded into Zeebrugge with the addition of a new estuary bunker barge to its fleet under a time charter agreement. The 4,050 cbm-capacity barge Odyssee will primarily deliver biofuels in the Port of Zeebrugge, but also in other northwest European locations, Burando said.

DNV recorded 17 new alternative fuel-capable vessel orders in February, said Kristian Hammer, senior consultant at DNV. LNG accounted for 14 of the 17 new orders and LPG for the remaining three. No new methanol- or ammonia-capable vessels were ordered during the month.

An independent study has found that North Sea Port meets the safety and infrastructure requirements to bunker LNG, methanol, ammonia and hydrogen at its ports in Vlissingen, Terneuzen and Ghent. The study found that physical deliveries using both tankers and trucks can be carried out safely for both seagoing and inland vessels across the port area, said North Sea Port's chief executive Cas König.

By Konica Bhatt

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