- VLSFO in Singapore was at a $5/mt discount to Rotterdam’s price level.
- Traditionally, large quantities of fuel oil flowed from Russian refineries to Northwest Europe, and from there on to the Mediterranean and other markets.
- There’s got to be some elasticity where people say, well.
Since Russia’s invasion of Ukraine last month, bunker markets have shifted dramatically, with Singapore now rivalling Rotterdam as the world’s cheapest significant maritime fuels hub as reported by Ship & Bunker
VLSFO in Singapore was at a $5/mt discount to Rotterdam’s price level on Wednesday, compared with a $59.50/mt premium on February 18 before the start of the war.
Gibraltar and Malta have also seen much larger VLSFO price gains than Singapore over the same period.
Traditionally, large quantities of fuel oil flowed from Russian refineries to Northwest Europe, and from there on to the Mediterranean and other markets.
Fuel oil also came eastwards into the Mediterranean from Russian Black Sea ports.
Bunker prices in Northwest Europe benefited from being closest to the Russian Baltic exports — and therefore cheapest — with prices gradually getting more expensive as the product flowed from there to the south and then eastwards.
With these deliveries being slowed or stopped altogether by the Western reaction to the invasion of Ukraine, Europe is now facing shortages to a greater extent than other regions, Adrian Tolson, head of consultancy BLUE Insight, told Ship & Bunker on Wednesday.
“The standard arbitrage of cargoes has been blown apart by this right now,” he said.
“This is completely uncharted territory for those markets.”
The bunker markets are now likely to see an eastward shift in demand as a result of these price changes, according to Tolson.
“There’s got to be some elasticity where people say, well.”
“I’m guessing Rotterdam’s Q1, or even Q4 of last year is going to be the peak of its bunker demand for the next year or two.”
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Source: Ship & Bunker