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The rise in bunker prices has come to a halt and the question now is “What next?”

It could be that prices fluctuate around recent levels, but for the next major leap upwards, there has to be confidence of a successful Covid-19 vaccine, said Integr8 Fuels.

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Integr8 Fuels, the bunker trading and brokerage arm of Navig8, on Wednesday (16 September) published an article analysing other overlooked Covid-19 related factors behind the standstill in the rise of bunker prices, such as pharmaceutical developments, that have influenced it to become bearish about the bunker market: 

In all our previous notes and podcasts we have been relatively bullish on bunker prices rising from their extreme lows at the end April, even though at some stages there was a stuttering in the upward trend. 

The sentiment was driven by tightening oil fundamentals; demand began to rebound and OPEC+ made major cuts to oil production.  But these signals have taken a turn.  In our Integr8 podcast 3 weeks ago we did take a more nervous approach to any further short term rises in price, but bunker prices have taken more of a hit and have dropped $40/ton (for VLSFO in Singapore) in the past 14 days.

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Looking at oil fundamentals at the moment, there are far fewer concerns about oil supply, with the OPEC+ countries producing at close to the agreed levels; it is much more about demand now.  The reversal in crude prices has come from a far greater concern about the ‘rebound’ in total oil demand, with the emerging threat of a second Covid-19 wave and the associated lockdowns taking place.

Since mid-May VLSFO prices have closely tracked the price movements in Brent futures, with Singapore prices very close to 102% of the Brent price throughout the period (on a weight basis).  So, as the crude price has moved up or down, this has led VLSFO up or down by a similar amount.

Screen Shot 2020 09 18 at 2.39.07 PM

Although VLSFO prices have closely tracked movements in the Brent price for the past 4 months, this is not the case for HSFO. The price of HSFO has strengthened considerably against crude (and so VLSFO), going from 66% of the Brent price in early May to 84% currently.  The drivers here are that demand for HSFO has been relatively flat and one of the least affected products from covid-19, and at the same time refinery runs have fallen and the OPEC+ production cuts have focused on heavier, higher sulphur crude grades; all this has led to a ‘constrained’ supply of high sulphur fuel oil.

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Between early May and now the price of HSFO in Singapore has risen by around $100/ton, with $55/ton of this accounted for by the underlying rise in crude prices, but a further $45/ton gain because of the relative strength in HSFO.  It is these dynamics that have squeezed the VLSFO/HSFO differential over the past 3½ months.

The very recent drop in oil prices reflects the changing perspective of how fast oil demand can recover and how long the covid-19 impact could last.  Over the past few months most analysts have downgraded their views on future oil demand, with for instance demand estimates for the third and fourth quarters this year reduced by 1.6-1.8 million b/d since July.  Also, expectations for next year are relatively flat and 1 million b/d below levels projected in July.  The current demand position is ‘the rapid rebound has come to an end and any future increase will be far more muted’.  Hence, the drop in oil prices over the past 2 weeks.

Screen Shot 2020 09 18 at 3.15.17 PMLooking at different oil products, it is clear the demand impact on the bunker market has been far less than for other sectors.  In the graph below the orange line represents the change in total fuel oil demand on a monthly basis vs the corresponding month in 2019.  This shows fuel oil demand running at around 0.5 million b/d below 2019 levels throughout this year and next year.

Screen Shot 2020 09 18 at 2.39.47 PM

In contrast jet/kerosene demand collapsed in April and even by the end of next year is still expected to be below 2019 levels (the airline industry is looking at 2024 to stand a chance of getting back to earlier demand).  It is then the road transportation sector where the biggest swings in absolute demand are taking place.  Gasoline, diesel, gasoil has accounted for the biggest part of the demand loss and the biggest rebound since April.  However, only minor gains are forecast between now and the end of 2021.  The possible second Covid-19 wave is hanging heavily over this and economies generally.

Putting all these demand developments together, total oil demand is not expected to get above 2019 levels until the end of next year, or possibly into 2022.  Hence the bearish sentiment in today’s market.

In past notes, we have looked at changes in US oil stocks as an early indicator of how well oil demand is doing.  This will remain an influence, but low refinery margins and higher Covid-19 infection rates and lockdowns have had a bigger (negative) impact.

It could be the case that prices fluctuate around recent levels, but for the next major leap upwards in price there has to be the sign and confidence of a successful Covid-19 vaccine.  Mixed into the recent news was a halt in one of the key, advanced, vaccine trials (which is typical for such trials) and this has been taken as a bearish signal in the oil markets.

So, in addition to all the other oil indicators we have highlighted before, we must add pharmaceutical developments to the list.  There are close to 200 Covid-19 vaccine trials currently underway and 9 of these are in their final phase large-scale trial before possible approval.  Some analysts are suggesting Q1 next year as a potential time-frame for a vaccine to hit the market.  This may be the case, but this is an area where those carrying out the clinical trials and those in a position to approve (or not) a vaccine are far better placed to know than the rest of us.

As before, headline news on US oil stocks, refinery margins and US/China/Russia/Saudi Arabia politics will all steer oil prices, but the current signal for any big hike in bunker prices (and oil prices generally) is likely to be the emergence of a Covid-19 vaccine.


Photo credit and source:
Integr8 Fuels
Published: 18 September, 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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