- Bunker fuel prices have been on the rise since bottoming in the summer of 2020, but have accelerated rapidly to new record highs as global oil prices are now over $110 per barrel.
- More recently, the bunker price spread has further widened, averaging $216 per tonne so far in 2022, 85.7% higher than in 2021.
- Analysts at investment bank Jefferies have also been looking at the impact of today’s sky-high bunker prices.
Bunker prices have surpassed $900 a tonne for the first time in history at two of the world’s top bunkering hubs as reported by Splash 247.
High average price
Prices in Fujairah, the world’s third-largest bunkering port, hit $918 today, while they stood at $904.50 in Singapore, the top bunkering hub in the world, with Ship&Bunker’s overall global average price at a record high of $885.50.
Bunker fuel prices have been on the rise since bottoming in the summer of 2020, but have accelerated rapidly to new record highs as global oil prices are now over $110 per barrel.
Sanctions against Russia as well as general geopolitical uncertainty and tensions have sent Brent prices to the highest level since 2014.
The price of very low sulfur fuel oil is up 35% since the beginning of the year, and the fuel spread between VLSFO and HSFO is now over $200 per tonne.
Bunker price spread
A new report from Braemar ACM noted that since the implementation of IMO 2020, the spread between VLSFO and HSFO has widened each year, and forward pricing at current levels suggests this will persist through 2022 and into 2023.
More recently, the bunker price spread has further widened, averaging $216 per tonne so far in 2022, 85.7% higher than in 2021.“Forward prices indicate these levels are likely to drop off modestly in 2022, averaging at $189.4/t, but still significantly higher than previous years’ levels,” Braemar ACM stated.
Analysts at investment bank Jefferies have also been looking at the impact of today’s sky-high bunker prices.
Rising fuel cost
“Owners operating in the spot market on voyage charters are more exposed to rapidly rising bunker prices, especially in the short run. That said, owners will demand higher rates overtime to compensate for rising fuel costs and new rate floors will be established,” a report from Jefferies pointed out, going on to highlight how ships with scrubbers installed will profit from the $200+ fuel price gap.
Looking at the impact on the container trades, Lars Jensen, CEO of consultancy Vespucci Maritime, detailed via LinkedIn that container carriers use some 60m tons of fuel per year. This means the total fuel cost has increased by $37m per day since the start of the year, equating to $80 per teu.
“[S]ubstantial BAF increases are coming,” Jensen warned today.
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Source: Splash 247
