- The re-routing of a growing number of ships around Africa to avoid potential attacks in the Red Sea is altering refueling patterns and boosting demand for bunker fuel.
- Ships are expected to top up more at Singapore and Rotterdam, the two busiest bunkering ports and where fuel is competitively priced, as they try to hedge against uncertainty over route changes.
- Attacks by Yemen’s Houthi militia on merchant ships in the Red Sea and retaliatory U.S. strikes have ratcheted-up tensions in the Middle East as the Gaza war rages on.
- The attacks by the Iran-allied Houthis, which they say are in support of Palestinians, target a route that accounts for about 15% of the world’s shipping traffic and acts as a vital conduit between Europe and Asia.
Increased travel distances and speeds resulting from Red Sea diversions have added around 800,000 to 1 million mt/month to global bunker demand, reports Engine citing a recent report by the International Bunker Industry Association (IBIA) noted.
Bunker demand boosted in Mauritius and Canary Islands
It has now been over 200 days since Yemen’s Houthi rebel group began attacking commercial ships in the southern Red Sea and Bab al-Mandeb Strait between Yemen and East Africa. The attacks had forced several shipping companies to reroute their vessels around the Cape of Good Hope instead of the shorter Suez Canal route.
These diversions have led to a significant rise in bunkering activity in ports along the African coastline, offshore Africa and islands near the African continent, the IBIA study found.
Port Louis in Mauritius has experienced a considerable rise in bunker demand. While the average monthly demand was around 30,000 mt throughout most of 2023, it doubled to 60,000 mt/month in the first quarter of 2024.
Bunker demand also increased in Cape Town, with 40,000 mt/month of bunkers sold in the first quarter of 2024.
Similarly, Las Palmas in the Canary Islands, located off northwestern Africa, has seen total bunker demand surge by 55,000 mt/month to 370,000 mt/month in the first quarter of 2024.
Total bunker demand has also increased in the New Year, with 400,000 mt/month of bunkers sold in the first quarter of 2024 – an increase of 50,000 mt/month from last year. This rise is attributed to “container services usually transiting the Mediterranean and not diverting around Africa,” according to IBIA.
Singapore has also recorded some uptick in bunker demand, rising from 4.23 million mt/month in the first quarter of 2023 to 4.62 million mt/month in the first quarter of 2024. “Singapore has absorbed 40% of the increased demand created by the Red Sea crisis,” the IBIA report explained.
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Source: Engine
