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Integr8 Fuels: Stability seen in bunker prices, but there is still a lot happening out there

The overall oil supply/demand fundamentals has the biggest bearing on prices and there is still a lot of uncertainty in terms of demand going forward from the lockdowns.

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Integr8 Fuels, the bunker trading and brokerage arm of Navig8, on Wednesday (22 July) published an update on bunker pricing and why it expects the VLSFO/ HSFO differential to widen based on current market conditions: 

Following on from our earlier Integr8 notes on developments in bunker prices, oil prices and the supply/demand fundamentals behind the oil industry, here we give an update on bunker pricing and some of the possible next moves in the market.

Introduction

After the extreme turmoil in the market in the first half of this year, we have just seen a 6-week period of relative calm. Oil prices have generally stabilized, with Brent just above $40/bbl and VLSFO in the $300-330/ton range (in Singapore), as seen in Fig 1. We are in that phase where oil demand is recovering, but there is no straight line out of this, and at the same time the OPEC+ group have successfully made huge reductions in oil production. These factors have lifted prices from their end-April lows and meant we have seen these past 6 weeks of near consistent pricing.

Integr8 Fuels 1

But this is by no means the end of the road. As we have outlined in previous notes, the overall oil supply/demand fundamentals will have the biggest bearing on prices in our markets and there is still a lot of uncertainty here. Total oil demand is rising, and this will push prices higher, but it’s a ‘bumpy road’ and it seems we are in for more localized or regional lockdowns in many countries. Clearly the US, as the biggest consumer, will create the biggest headlines and is likely to have the biggest impact on price movements, either up or down.

Other factors putting an upwards spin on prices are the indications of successful vaccines being developed and the huge government and EU stimulus programs being put in place. Any combination of higher oil demand and any/all of these other factors will push oil prices above the low $40s we have seen for Brent in the past 6 weeks.

VLSFO and HSFO dynamics

The other side of the equation is oil supply. We have seen major OPEC+ production cutbacks, originally announced for May/June and then extended into July, but these are coming to an end and there is every indication that the group will increase output by around 2 million b/d from the 1st August. However, this is not a surprise and is largely already factored into current/futures prices. As long as Saudi Arabia and Russia appear to be co-operating, oil prices are likely to be supported.

Watching these oil demand and covid-19 factors, along with OPEC+ developments, will give the key indications for absolute oil prices. However, what is happening with oil demand is likely to have the biggest influence and this is most immediately visible through oil stocks data; this is why the US weekly oil stock levels are watched so closely and have so much price influence.

Over-and-above these key developments in absolute oil prices, there will be specific issues that will have a further impact on our market and bunker prices. The relative price for VLSFO against crude has moved to extremes. At the start of the year there was a huge VLSFO premium as IMO 2020 kicked-in, and it was trading up to 45% above crude (Brent). As the VLSFO market settled, this relationship eased to 110% of crude in late February. The enormous volatility in March and April stemmed from the impact of Covid-19 and the very weak position of crude, with a brief interlude in early April as crude strengthened temporarily ahead of Saudi Arabia and Russia finding an agreement to cut production from May 1st. It has been since these production cutbacks took place in May that crude has strengthened to the point where for the past 6 weeks VLSFO pricing relative to crude has been very low, at only 102%, as shown in Fig 2.

Integr8 Fuels 2

The nature of VLSFO typically as a blend means that as demand for gasoil/diesel, jet and gasoline increases, so the price of these products relative to crude will rise and this will also ‘pull-up’ the relative price of VLSFO to crude. So as oil demand increases and crude prices move higher, we could expect VLSFO prices to increase by even more, not back to the 130% plus levels to Brent, but certainly higher than the present 102%.

These factors that have ‘squeezed’ the relative price of VLSFO to crude are not as apparent in the HSFO market. It is the opposite here, and HSFO prices relative to crude are currently strong; this largely stems from the cutbacks in OPEC+ production, where a high proportion are heavier, high sulphur crudes from the Middle East, and this has meant a subsequent drop in HSFO supply.

This means we have been in a period where VLSFO prices are relatively weak and HSFO prices relatively strong. Hence, the differential between the two bunker products has narrowed considerably over the past few months, to only around $60-70/ton.

Focusing on the next 1-2 months, as some of the OPEC+ cuts are reversed from 1st August, so more heavy, high sulphur crudes will enter the market and the price of HSFO should ease relative to crude.

Fig 3 illustrates the HSFO price relationship to VLSFO in Singapore since late last year (the orange line & left axis) and how HSFO has moved from 50-60% of the VLSFO price to more than 80% of the VLSFO price today.

Integr8 Fuels 3

As outlined above, the cutbacks in OPEC+ production since 1st May will have supported HSFO prices and the blue line (right axis and inverted from high to low) shows Middle East crude production falling from 24 million b/d in April to only 19 million b/d by June at the same time as HSFO moved from around 55% of VLSFO to just above 80% of VLSFO (Fig 4).

Integr8 Fuels 4

The increase in Middle East production to around 20 million b/d next month is expected to reverse this relationship between VLSFO and HSFO.

Going forward

So, looking ahead over the short term we could expect this VLSFO/ HSFO differential to widen, as:

  1. VLSFO prices rise relative to crude as demand for all transportation fuels increase; and
  2. The relative price of HSFO to crude falls with the hike in heavy/ sour crude production from the Middle East (and other OPEC+ countries).

The VLSFO/HSFO spread is not going back to the $300 plus seen at the start of the year, but certainly wider than current levels. The forward curves for this spread are trading at close to $90/ton by the end of this year, and although this is never a forecast, it does illustrate the current market thinking that we are at a low in terms of this VLSFO/HSFO spread. Analysing the oil fundamentals is important, and we continue to monitor the extent of stronger oil demand and/or OPEC+ production levels, which in-turn will determine the absolute level of prices in the bunker market and also where the VLSFO/HSFO spread goes.


Photo credit and source:
Integr8 Fuels
Published: 28 July, 2020

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Legal

Singapore police arrest eight over alleged illegal MGO transaction off Tuas

SPF says preliminary investigations found that crew members of a Singapore-registered tugboat misappropriated MGO worth about SGD 10,570 without their company’s knowledge and sold it illegally.

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Singapore police arrest eight over alleged illegal MGO transaction off Tuas

The Singapore Police Force (SPF) on Thursday (13 August) said it has arrested eight men, aged between 25 and 54, for their suspected involvement in an illegal transaction of Marine Gas Oil (MGO).

On 13 August 2026 at about 1.05am, officers from the Police Coast Guard (PCG) conducted a check on a Singapore-registered tugboat in the waters off Tuas and discovered that eight crew members were possibly involved in the illegal transaction of MGO. 

“Preliminary investigations revealed that the crew members of the tugboats misappropriated MGO valued at about SGD 10,570 (USD 8,258), without their company’s knowledge,” SPF said in a statement.

“The MGO was sold illegally for their personal financial gain.”

The eight crew members will be charged in court on 14 August 2026 with the offence of theft by servant of property in possession of master under Section 381 of the Penal Code 1871 If convicted, they shall be punished with an imprisonment term that may extend to seven years and shall also be liable to fine.

“The Police take a serious view of illegal transaction of MGO in Singapore Territorial Waters and will continue to conduct enforcement and security checks to prevent, deter and detect such illicit activities in Singapore waters,” SPF added. 

 

Photo credit: Singapore Police Force
Published: 14 August, 2026

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Port & Regulatory

Gard: Sulphur-related bunker claims rise amid tighter China MSA enforcement

Claims involving excessive sulphur content in marine fuels have been rising, while stricter inspections by the China MSA have heightened the focus on sulphur compliance, particularly in the Bohai Sea.

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shraga kopstein on Unsplash

Maritime protection and indemnity (P&I) club Gard on Wednesday (12 August) highlighted that claims involving excessive sulphur content in marine fuels have been rising, while stricter inspections by the China MSA have heightened the focus on sulphur compliance, particularly in the Bohai Sea:

Rise in off-spec sulphur claims

Recent claims experience indicates that bunker quality continues to pose a significant operational risk for shipowners. In our earlier review of bunker-related claims during the first five months of 2026, we highlighted a rise in off-specification bunker incidents amid increased pressure on global fuel supply chains following the escalation of the conflict in the Middle East. 

Specifically for Sulphur compliance, between January and June 2026, the number of sulphur-related cases increased by more than threefold compared with the same period in 2025. Notably, the number of cases recorded in the first six months of this year has already exceeded the total number reported during the whole of last year by approximately 40%. 

While each case is fact-specific, the increase is notable because excessive sulphur content constitutes a MARPOL compliance issue. Unlike many other bunker quality problems, sulphur non-compliance identified through port state inspections can result in vessel delays, enforcement action, and substantial costs associated with debunkering and fuel disposal. 

The map below illustrates the geographical distribution of sulphur-related claims recorded during the first six months of 2026, based on the location where the bunkers were stemmed.

Distribution of sulphur related claims

China MSA steps up sulphur compliance enforcement

According to our correspondent, Huatai, on 5 June 2026, the maritime authorities of Tianjin, Hebei, Liaoning and Shandong jointly launched a special campaign on ship pollution prevention and control in the Bohai Sea region. The campaign involves coordinated supervision by local MSA branches across the region and is expected to last nearly five months. It covers major ports and surrounding port areas in the Bohai Sea region, including Tianjin, Tangshan, Qinhuangdao, Huanghua, Jinzhou, Yingkou and Longkou. 

While the initiative is broader than bunker sulphur compliance alone, its scope includes inspections relating to air pollution prevention, SOx emissions, fuel compliance and other high-pollution-risk operations. Enforcement measures are expected to comprise onboard inspections, cross-regional enforcement activities, unannounced spot checks and remote monitoring. These efforts will be supported by a combination of UAV patrols, maritime patrol vessels, shore-based monitoring systems and rapid on-site fuel testing. 

As a result, vessels trading in the Bohai Sea region may experience increased scrutiny of fuel compliance documentation, fuel sampling records, onboard fuel management procedures, and the handling or disposal of suspected non-compliant fuel.

Documents typically requested by China MSA

Based on our recent experience, including the case discussed above, and subject to the specific requirements of the local MSA office, owners and operators may be requested to provide supporting documentation such as: 

  • Bunker documentation – Bunker Delivery Notes (BDNs), MARPOL fuel sample records, fuel test reports, and relevant fuel quality certificates. 
  • Statutory certificates – including the International Air Pollution Prevention (IAPP) Certificate and International Oil Pollution Prevention (IOPP) Certificate. 
  • Operational records – engine logbooks, deck and navigation logbooks, Oil Record Book entries, and records relating to fuel transfers, storage and consumption. 
  • Sampling documentation – the Master’s statement and any records demonstrating how fuel samples were drawn, sealed, labelled, handled and retained. 
  • Correspondence records – communications with the authorities, bunker suppliers, charterers and other relevant stakeholders. 
  • Fuel disposal records – approved disposal plans, debunkering documentation, receipts and evidence of final disposal, where applicable. 

The exact documentation required will depend on the nature of the investigation, the findings of the inspection, and the requirements of the local enforcement authority. 

Possible regulatory consequences in China

Under the Air Pollution Prevention and Control Law of the People’s Republic of China, ocean-going vessels are required to use fuel oil meeting atmospheric pollutant control requirements after berthing. Vessels operating within designated emission control areas must also comply with applicable emission standards. Article 106 provides that where vessel fuel oil fails to meet applicable standards or requirements, the competent maritime authorities may impose fines ranging from RMB 10,000 to RMB 100,000. Liability may extend to shipowners, ship operators and ship managers depending upon the circumstances of the case. 

Recommendation

Sulphur compliance should be treated as both a fuel quality and regulatory risk. Owners and operators are encouraged to take preventive steps before bunkering, act promptly if non-compliant fuel is suspected, and preserve evidence carefully if an inspection or claim arises. Under amended 

Resolution A.1206(34), Appendix 18, 2.1.5, if the BDN shows compliant fuel, but the master has independent test results of the fuel oil sample taken by the ship during the bunkering which indicates non-compliance, the master may document this by notifying the ship’s flag Administration, with copies to: 

  • the competent authority of the relevant port of destination, 
  • the Administration under whose jurisdiction the bunker deliverer is located, 
  • and to the bunker deliverer.

 

Photo credit: shraga kopstein on Unsplash / Gard
Published: 14 August, 2026

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LNG Bunkering

Shell expands LNG bunkering footprint in Spain with Valencia

As one of the region’s key maritime hubs, the company said Valencia expands the options available to shipowners seeking LNG supply along major shipping routes.

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Shell expands LNG bunkering footprint in Spain with Valencia

British oil giant Shell on Thursday (13 August) said Valencia has joined its growing network of bunkering locations, making LNG available as a marine fuel.

The successful completion of the first LNG bunkering operation in Valencia marked an important milestone for Spain and further strengthened Shell’s LNG supply capabilities across the Mediterranean. 

In a video shared by the company, bunkering vessel Alice Consulich was shown supplying an undisclosed volume of LNG to the container ship MSC Sabrina.

“As one of the region’s key maritime hubs, Valencia expands the options available to shipowners seeking LNG supply along major shipping routes,” Shell said in a social media post. 

Shell said the achievement reflected the strong collaboration across the maritime value chain, including MSC Mediterranean Shipping Company, the Port of Valencia and Fratelli Cosulich Group.

“We look forward to making more LNG bunker deliveries in Valencia and across the Mediterranean as LNG infrastructure and capabilities continue to expand,” the company said. 

 

Photo credit: Shell
Published: 14 August, 2026

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