Ship fuel prices soaring amid war, industry warns
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The surge in bunker fuel is driving a broader increase in shipping costs, as carriers introduce emergency surcharges to offset the additional expenses.
PHOTO: REUTERS
- Shipping fuel prices have nearly doubled due to the Middle East war and Strait of Hormuz blockade, reaching "truly unprecedented" levels, according to IBIA.
- VLSFO prices have surged; Fujairah saw a doubling since February 27, and Singapore is up 106%. This impacts shipping costs globally.
- Shipping firms are adapting by slowing ships or finding alternative routes. The UN began talks March 18 to address the shipping crisis.
AI generated
LONDON - Shipping fuel prices have reached “truly unprecedented” levels, having nearly doubled from the cargo crunch driven by the Middle East war, an industry leader told AFP on March 18.
The Iranian forces’ blockade of the crucial Strait of Hormuz after the war broke out on Feb 28 has severely restricted the supply of ship fuels to ports in the region, said Mr Constantinos Capetanakis, chairman of the International Bunker Industry Association (IBIA).
IBIA is the global trade association for the marine fuel industry.
The average price of very low sulphur fuel oil (VLSFO) – used by many ships – across the world’s 20 largest refuelling ports was US$1,017 per tonne on March 18, up from US$544 per tonne on Feb 27, according to data from industry monitor Ship and Bunker.
“These are urgent situations and circumstances. You need to plan ahead as much as possible,” Mr Capetanakis told AFP, calling for “calmness and realism” from the shipping industry.
Prices for marine or “bunker” fuel are at their highest since the Russian invasion of Ukraine, researchers at HSBC said in a report.
The surge in bunker fuel is driving a broader increase in shipping costs, as carriers introduce emergency surcharges to offset the additional expenses, big companies have said.
Prices have more than doubled since Feb 27 at the Port of Fujairah in the United Arab Emirates, which was attacked over the weekend and March 16, Ship and Bunker reported.
In Singapore, the world’s largest bunkering hub, VLSFO prices are up by 106 per cent.
“Ports in Europe and the Americas are more insulated for now, although we’re seeing some evidence of demand rising at hubs away from the Middle East,” Ship and Bunker financial editor Jack Jordan told AFP on March 18.
Bunker costs account for about 50 per cent of a ship’s operating expenses, according to Mr Capetanakis, who is also the bunker director at global shipping company Star Bulk.
Shipping companies and freight firms chartering vessels are reportedly adapting to the high fuel prices by ordering ships to slow down to save on fuel, or finding alternative routes and ports to bunker.
The UN International Maritime Organization began two days of talks on March 18 to discuss efforts to ease the shipping crisis. AFP
