- Red Sea reopening risks cutting fuel consumption.
- VLSFO demand peaks amid oversupply pressures.
- Scrubber uptake and ECAs reshape fuel mix.
The global conventional bunker markets are bracing for a year of modest growth ahead, with some potential risks tied to the return of traffic in the Red Sea and the peak demand for 0.5% sulfur fuel oil, which is the most commonly used marine fuel grade, reports S&P Global.
Geopolitics and ton-mile demand
Recent geopolitical tensions have pushed ships to take longer routes, which has boosted ton-mile demand and marine fuel usage. However, analysts point out that these gains are being increasingly countered by advancements in vessel energy efficiency.
DNV demand outlook
According to DNV, global consumption of oil-based marine fuel is projected to dip from 11,891 petajoules in 2024 to 11,787 Pj in 2025, before seeing a slight rebound to 11,813 Pj in 2026.
Market oversupply concerns
“Our base case is for a muted demand environment next year. The market remains long oil, long liquidity, long assets and suppliers — and short demand growth,” bunker trader Monjasa CEO Anders Østergaard told Platts, part of S&P Global Energy.
Competitive pressure ahead
“We expect 2026 to be a relatively slow and competitive year where players will need to adjust their commercial expectations,” Østergaard added.
IEA bunker demand view
The International Energy Agency anticipates that global bunker demand will level off at around 5 million barrels per day by 2030, even with a notable increase of 140,000 b/d in 2024, primarily driven by ship diversions.
Red Sea security disruptions
Since October 2023, attacks from Yemen-based Houthi militants on merchant vessels have compelled ships to steer clear of the Suez Canal, opting instead to navigate around the Cape of Good Hope, which has led to longer voyages and higher fuel consumption.
Bab al-Mandab traffic trends
Data from IMF PortWatch indicates that transits through the Bab al-Mandab Strait are still about half of what they were before the war, even after a pause in attacks during the Israel-Hamas ceasefire in October 2025.
Potential impact of Red Sea return
“This will affect [fuel] consumption of the vessels,” said Guido Cardullo, head of marine at bunker supplier Fratelli Cosulich. “The closing of the Suez Canal was positive in terms of volume consumed.”
Energy transition delays
Cardullo mentioned that many in the industry are anticipating a slower transition to alternative fuels than previously expected, following delays to the IMO’s Net-Zero Framework, which was initially set to start pricing bunker fuel emissions from 2028.
The IMO has also reduced sulfur limits for marine fuels in the Mediterranean to 0.1% starting May 2025, with similar restrictions set to take effect in the Canadian Arctic and Norwegian waters from March 2026.
Shift Away from VLSFO
The rules in Emission Control Areas have pushed many shipowners to move from 0.5% sulfur VLSFO to 0.1% sulfur marine gasoil. Some are even opting for scrubbers to burn the cheaper HSFO or making the switch to LNG and biofuels. “We have seen peak VLSFO … it has become a distressed product due to oversupply,” said Adrian Tolson, owner of consultancy 2050 Marine Energy.
Fuel price spreads
The premium for VLSFO over HSFO averaged $65.60 per metric ton in the first 11 months of 2025. That’s quite a drop from $98.90 per metric ton in 2024 and $120.90 per metric ton in 2023.
Rotterdam bunker sales
DNV data reveals that the number of vessels equipped with scrubbers rose from 5,469 in 2023 to 6,168 in 2024, with expectations to hit 6,712 by the end of 2025. In Rotterdam, bunker sales tell an interesting story. From January to September 2025, the port recorded 2.1 million metric tons of VLSFO and 2.6 million metric tons of HSFO sales, indicating a second consecutive annual decline in deliveries of 0.5% sulfur fuel.
Looking at the Mediterranean, VPS reported that VLSFO’s share in the ECA bunker mix dropped to 30% between May and October 2025, down from 53% earlier. Meanwhile, MGO, HSFO, ultra-low sulfur fuel oil, and biofuels all gained ground. “The supply chain needs to adapt for VLSFO as a secondary/tertiary demand product,” Tolson said.
Singapore bunker performance
Finally, Singapore, the largest bunker port in the world, achieved record sales of 54.9 million metric tons in 2024, with a 1.7% year-on-year increase to 46.4 million metric tons in the first ten months of 2025. The diversions in the Red Sea have boosted bunker demand in Singapore and various African ports, but they’ve hurt ports in Egypt, the East Mediterranean, and the Middle East.
Potential trade flow reversal
“The diversion of ships over the past two years boosted demand in places like Port Louis and the Canaries … If Red Sea transit returns to normal, we’re likely to see traditional hubs such as Fujairah naturally pick up again,” said Philip Wang Balke, senior trader at Integr8 Fuels.
Pressure on major hubs
“These conditions will hit major flow ports harder than smaller regional ports, simply because the large hubs — Singapore included — are most exposed to the competitive pressure created when too many suppliers chase limited incremental demand,” Østergaard said.
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Source: S&P Global
