Re-routing of ships spurs demand for bunker fuel at diverse ports.
Escalating tensions in the Red Sea, as a result of attacks by Yemen’s Houthi militia on merchant ships, are causing a significant shift in global bunker fuel patterns. The re-routing of ships around Africa to avoid potential attacks has led to altered refueling patterns and increased demand for bunker fuel at ports such as Mauritius, South Africa, and the Canary Islands. Singapore and Rotterdam, the two busiest bunkering ports, are also expected to witness more ship refueling as vessels hedge against uncertainty over route changes.
The attacks by the Houthi militia in the Red Sea, a crucial route for about 15% of the world’s shipping traffic between Europe and Asia, have prompted hundreds of large vessels to reroute around the southern tip of Africa, adding 10-14 days of travel. This has resulted in congestion and increased demand for bunker fuel at ports around Africa, putting pressure on port infrastructure.
John A. Bassadone, CEO of independent bunker supplier Peninsula, highlighted the significant impact on bunkering ports around Africa due to increased traffic. Bunker fuel demand has surged at various ports, including Mauritius’ Port Louis, Gibraltar, the Canary Islands, and South Africa. Prices of low-sulfur bunker fuel at Cape Town have jumped 15% to nearly $800 per metric ton since mid-November when the attacks began.
Container ships were the first to divert away from the Red Sea, and now oil tankers and dry bulk carriers are following suit, leading to a diversion of bunker demand to West Mediterranean ports at the expense of East Mediterranean. Peninsula’s Bassadone anticipates increased demand in Las Palmas and Western Mediterranean ports, considering the possibility of African ports exceeding capacity.
While Singapore and Rotterdam have yet to experience a surge in demand, industry sources expect buying to pick up in the coming weeks as ships aim to lift more fuel at competitive prices. The shift in bunker fuel patterns is a response to higher ton-mileage and uncertainties, prompting vessels to fill up their tanks in advance to ensure sufficient supplies.
Note: Bunker fuel is a type of fuel oil used aboard ships, typically containing higher sulfur content. Low-sulfur bunker fuel is an environmentally friendly alternative with reduced sulfur content, complying with international regulations to curb emissions.
-Reuters