Russian invasion propels price of ship fuel to historic high, reports FreightWaves.
Ship fuel costs have “gone parabolic”
The price of ship fuel was flirting with a new record even before Russia invaded Ukraine. Then war broke out, and the highs of the past were left far behind. Ship fuel costs have “gone parabolic,” said Braemar ACM Shipbroking.
To the extent the fuel cost increase is passed along to the shippers of containerized goods and bulk commodities such as oil and grain, it will add to inflation. To the extent it’s not passed on, it will lower shipping’s bottom line.
Burning more HSFO fuels
Ships consumed high sulfur fuel oil (HSFO) until the IMO 2020 environmental regulations went into force two years ago. Since Jan. 1, 2020, ships have been required to burn more expensive fuel with 0.5% sulfur content known as very low sulfur fuel oil (VLSFO). Ships equipped with exhaust-gas scrubbers can continue to burn HSFO, which has a sulfur content of 3.5%.
According to Ship & Bunker, the average price of VLSFO at the world’s top 20 bunkering ports reached $882.50 per ton on Thursday, up 73% year on year.
In Fujairah, United Arab Emirates, one of the world’s largest bunker (ship fuel) hubs, the price of VLSFO rose to $922.50 per ton. These price levels are unprecedented.
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Source: FreightWaves
