Bunker Fuel

Integr8: What is driving increased bunker prices and how quickly can they fall?

Integr8 breaks down the fundamentals that are behind the price hikes, specifically, what is happening on supply side in Saudi oil production and what is behind demand increase coming from China.

Published

3 years ago

October 4, 2023

Admin

By Steve Christy, Research Contributor, Integr8 Fuels
[email protected]

28 September 2023

VLSFO prices have been on another rise

A month ago, we wrote about high bunker prices which were based on two key factors: Tightness in most product markets; And additional oil production cutbacks by Saudi Arabia. Now, bunker prices are even higher.

Brent has moved above $90/bbl, with Singapore VLSFO above $660/mt and close to peak levels seen at the start of this year. Rotterdam VLSFO has been trading at around $615-635/mt, its highest so far this year. More recently Rotterdam prices have eased slightly but they are still above this year’s previous peaks, and Singapore prices remain at high levels.

Much tighter fundamentals are behind the price hike

On a very short-term basis, the market can see dramatic price shifts, but it is normally the fundamentals that drive price direction over a period of weeks and months. We are now in a strong fundamental period, with year-on-year growth in global oil demand at 3 million b/d in Q2 this year and projected at 2 million b/d in Q3 and Q4. The key factor here is growth is almost entirely centred on China.

At the same time there are huge constraints in oil supply, with the additional 1 million b/d voluntary cut made by Saudi Arabia, starting in July. In fact, part of the recent price hike is that Saudi Arabia has recently committed to extending these additional cuts through to the end of this year.

Additionally, the September 21st announcement by Russia which banned all diesel and gasoline exports to support their own domestic market and, we can see clear reasons why oil prices have taken another leap higher over the past month.

On the supply side, it is what’s happening to Saudi oil production

Saudi Arabia’s stated policy is aimed at supporting a market with less volatility, and more sustainable and predictable outcomes. As part of this strategy, the country had reduced crude output by 0.5 million b/d in line with the overall OPEC+ agreement, and then made a further 1 million b/d cut over the second half of this year. The net result is that Saudi crude production has fallen sharply over the past few months and is currently some 1.5 million b/d lower than average 2022 levels (8.9 million b/d in August vs an average of 10.4 million b/d last year). This lower level of output is expected to be maintained through to the end of the year.

Looking at alternative crude supplies, US production crude production is near record highs and higher oil prices has incentivised even greater investment in US shale oil. However, the problem here is Saudi cuts are instantaneous and any rise in US shale production from new investment takes months. Hence, current signals are for a potential tightness in supply over the rest of this year, before an expected 1 million b/d hike in January as Saudi crude output climbs back towards 10 million b/d.

On the demand side it is all about China, China, China

Fundamentals on the demand side also point to higher oil prices. As mentioned, increases in global oil demand are running at 2-3 million b/d (year-on-year), and these are big numbers. However, they are almost entirely based on what is happening in China; product demand developments elsewhere are minimal, and even falling in Europe and projected to start falling in the US next year.

The reason for current very high year-on-year growth rates in China is that the country was still largely in lockdown through 2022, and the easing has only taken place this year. This is much later than almost all other countries worldwide, where the post-pandemic ‘boom’ took place in 2022, not 2023. Therefore, it is more-or-less China alone that is driving up oil demand this year.

Clearly there is a risk of weaker demand than forecast in many countries but if we are looking for a big price impact from the demand side, then it is more likely to be stories about China that are going to drive prices up or down.

Market tightness in Q3 & Q4, but potentially changing going into 2024

Bringing together these more extreme developments in supply and demand, the graph below illustrates global fundamentals on a quarterly basis. The key for us is that global oil supply exceeded demand through most of 2022 and in the first quarter of this year, resulting in an ongoing global stock build. However, we have just been through a turning point, where demand is exceeding supply in Q3 this year and this is expected to be repeated in Q4, leading to stock draws.

It is not until the start of next year that we see a reversal and another turning point is envisaged. It is at this stage; Saudi Arabia says it will lift its voluntary 1 million b/d cutbacks. At the same time year-on-year growth in oil demand is expected to ease back to around 1 million b/d. So, at the start of next year oil supply is projected to exceed demand once again, reverting us back to a world of stock builds.

Summarising by looking at the global stock build/stock draw positions, we can see the exceptional times we are currently in; Having moved to a position of stock draws in Q3 and projected for Q4 this year. In addition, the tightness in global stocks lies with oil products, and not crude oil. This has been driven by high product demand and exacerbated by several unplanned refinery outages this year.

Going into next year the position looks like reversing again, going back to a fundamental global stock build.

What’s next?

Given the fundamentals, these developments explain the wave of price rises we have seen in September.

Looking ahead over the rest of this year and into 2024, on the demand side China is the main story. Of course, Chinese demand could be higher than currently projected, in which case Brent crude could easily pass the $100/bbl ‘barrier’, along with Singapore VLSFO going above $700/mt.

However, the chatter at the moment is about weakness in the Chinese economy. If this translates to lower oil demand, then it will be a sign ‘to sell’, and prices for us all would come down. This is clearly the story to watch on the demand side.

The supply side seems more predictable – When Saudi Arabia announces the additional cutbacks will be eased (or there are strong indications of this), then oil prices are likely to fall. A reversal of the Russian ban on diesel and gasoline exports could also have a bearish impact.

Timing is everything in all these developments, and the extent of any fall in prices may still be dependent on how tight oil product stocks are at the time and what stocks look like doing in the near term.

Being precise on price movements is difficult, but we know prices never wait for the fundamentals to be borne out; Markets react on news, changes, and psychology. If the fundamentals do play out as shown in this report, then prices are more likely to fall before the end of the year, in anticipation of weaker fundamentals going into 2024. Let’s see what happens…..

Photo credit and source: Integr8
Published: 4 October, 2023

Related Topics:Bunker fuel - VLSFO Others - Research

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World Fuel and partners complete first green methanol bunkering of car carrier in Shanghai

Operation involved the delivery of approximately 2,800 MT of green methanol to “Arctic Tern” via a ship-to-ship transfer using SIPG Energy’s dedicated methanol bunkering vessel “M/V Hai Gang Zhi Yuan”.

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World Fuel and partners complete first green methanol bunkering of car carrier in Shanghai

Marine fuel provider World Fuel on Tuesday (21 July) said it successfully completed the first green methanol bunkering of M/V Arctic Tern, with EUKOR Car Carriers and SIPG Energy at the Port of Shanghai.

Arctic Tern is the first vessel in the new Shaper Class series of car carriers.

The operation involved the delivery of approximately 2,800 MT of green methanol to Arctic Tern via a ship-to-ship transfer using SIPG Energy’s dedicated methanol bunkering vessel M/V Hai Gang Zhi Yuan, the largest vessel of its kind in operation.

The bunkering operation was carried out at Haitong Terminal, Waigaoqiao Port Area, Shanghai Port, with cargo handling operations conducted simultaneously during bunkering.

This marks EUKOR Car Carriers’ first green methanol operation and the first time Arctic Tern has bunkered methanol since its delivery on 9 July. The operation marked the first bunkering at Shanghai Port of green methanol produced locally in Shanghai for an international PCTC operator.

It also demonstrated the city’s integrated green methanol value chain, spanning local production, storage and bunkering, and established a replicable “Shanghai Model” for green methanol supply.

World Fuel arranged the supply and delivery of the fuel on behalf of EUKOR Car Carriers, working with SIPG Energy as the physical supplier at the Port of Shanghai.

The green methanol supplied was produced from municipal solid waste, ISCC-EU certified, and had a carbon intensity value below 25 gCO₂e/MJ.

Arctic Tern is the first of fourteen Shaper Class vessels ordered by Wallenius Wilhelmsen. With a capacity of 9,300 car equivalent units and methanol dual-fuel capability, the vessel will be operated by EUKOR Car Carriers, jointly owned by Wallenius Wilhelmsen and Hyundai Motor Group. Following her first green methanol bunkering, Arctic Tern will continue her maiden voyage from Asia to Europe.

Xavier Leroi, COO Shipping Services at Wallenius Wilhelmsen and CEO of EUKOR Car Carriers, said: “Completing Arctic Tern’s first green methanol bunkering shortly after delivery is a significant milestone towards our decarbonisation ambition for both EUKOR Car Carriers and Wallenius Wilhelmsen. It demonstrates how investments in next-generation vessel technology and fuel flexibility are being translated into real-world operations.

“This achievement reflects the strong collaboration between all parties involved. Together, we have shown how partnerships across the maritime value chain can help make lower-emission fuels available and operationally viable at scale.”

Mark Tamsitt, SVP Global Marine Sales at World Fuel, said, “The first bunkering event with a new fuel is a significant moment for any shipowner, and our role is to make it as seamless as possible. By connecting EUKOR Car Carriers with SIPG Energy’s proven green methanol capability at the Port of Shanghai, we were able to deliver on reliable supply, fuel quality, and safe processes. As more of our customers bring methanol dual-fuel tonnage into service, we are committed to being the partner that makes these kinds of operations routine.”

Mr. Zhang Da, General Manager of SIPG Energy, said, “Welcoming Arctic Tern to the Port of Shanghai for her first green methanol bunkering demonstrates the strength and maturity of our supply capability. Building on our well-established methanol ship-to-ship bunkering services for container vessels, we have already extended such services to pure car and truck carriers (PCTCs). This bunkering sets a new record for the largest single SIMOPs green methanol bunkering for PCTCs in China, marking another step in building Shanghai’s position as a global green energy hub for international shipping.”

This operation follows Wallenius Wilhelmsen’s announcement on 9 July that Arctic Tern would complete her first methanol bunkering shortly after delivery. The vessel entered service on routes between Asia and Europe immediately following handover from China Merchants Jinling Shipyard in Nanjing.

Photo credit: World Fuel
Published: 22 July, 2026

Ammonia

HPA and MB Energy develop safety concept for STS ammonia bunkering

HPA says the Port of Hamburg will become “bunker ready” for ammonia, laying the groundwork for safe and reliable ammonia bunkering in the future.

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HPA and MB Energy develop safety concept for STS ammonia bunkering

The Hamburg Port Authority (HPA) and integrated energy company MB Energy on Tuesday (21 July) said they have completed a comprehensive risk analysis and developed a dedicated safety concept for ship-to-ship ammonia bunkering.

MB Energy said the analysis lays the groundwork for the safe introduction of ammonia as a future marine fuel.

“With our planned ammonia import terminal in Hamburg-Blumensand, MB Energy intends to provide the reliable land side supply infrastructure needed to support this transition across northern German ports,” it said in a social media post.

Mabanaft Group was renamed to MB Energy last year and merged over 50 existing brands under one identity.

Separately, HPA said the Port of Hamburg will become “bunker ready” for ammonia, laying the groundwork for safe and reliable ammonia bunkering in the future.

“The focus is in particular on container ships, cruise ships as well as RoRo and ConRo (Container/RoRo) ships,” it said.

“We expect ammonia to establish itself as an alternative marine marine fuel in the coming years. With our preparatory work, we are already creating the conditions to welcome the first ammonia-powered ships in Hamburg and to bunker them safely.:

HPA added that the import terminal for ammonia planned by MB Energy from 2029 will make a decisive contribution to ensuring the reliable availability of ammonia as a bunker fuel in northern German ports in the long term.

“The use of an ammonia bunker barge is considered a possible addition to the landside infrastructure to enable ship bunkering in the port and beyond in the future,” it said.

Photo credit: Hamburg Port Authority
Published: 22 July, 2026

Bunker Fuel

Alkagesta highlights key insights of Malta bunkering market in 2026

Darren Lee Axisa discusses the key trends influencing Malta’s bunkering market and the factors that will determine Malta’s long-term competitiveness as a regional bunkering hub.

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Alkagesta highlights key insights of Malta bunkering market in 2026

In an article published on Alkagesta Market Insights, Darren Lee Axisa, Malta Country Manager of Alkagesta, on Monday (20 July) discussed the key trends influencing Malta’s bunkering market and the factors that will determine Malta’s long-term competitiveness as a regional bunkering hub:

Malta’s bunkering and energy market is moving through a period of structural adjustment. The disruptions that defined the first half of 2026 have accelerated shifts in product demand, terminal strategy, and the competitive dynamics of one of the Mediterranean’s most strategically positioned bunkering hubs. For Alkagesta, whose storage footprint on the island approaches 300,000 cubic metres, the period has tested operational flexibility while reinforcing the value of diversified infrastructure access.

A Market Shifting in Two Directions

Malta’s broader economy has remained resilient — GDP growth reached 3.9% in Q1 2026 — but the bunkering market has undergone a significant product mix shift, the roots of which predate the current geopolitical disruption.

The Mediterranean Emission Control Area, which came into force on 1 May 2025, triggered an immediate and measurable realignment in fuel demand across the region. VPS data covering the first six months post-ECA implementation shows that across the top ten Mediterranean bunkering ports, VLSFO volumes fell 23%, MGO more than doubled, ULSFO quadrupled, and biofuels increased fivefold. In Valletta specifically, the shift was even more pronounced: VLSFO dropped 57% from 111,641 mt to 47,732 mt, while MGO volumes more than tripled from 33,299 mt to 103,445 mt, and ULSFO rose from 2,821 mt to 34,535 mt over the same period.

This structural rotation has been further accelerated by the broader regulatory environment. FuelEU Maritime and EU ETS requirements are pushing shipowners toward cleaner, verifiable fuel options at every port call — a direction Alkagesta had already positioned itself ahead of, having been among the first movers in the Mediterranean to support the transition to 0.1% sulphur fuel oil following the ECA’s introduction.

Layered on top of this regulatory shift has been a period of reduced terminal capacity affecting bunkering market availability across the island. Fuel oil volumes dropped roughly 35% year-on-year between January and May 2026, falling from approximately 382,000 mt in 2025 to 247,000 mt. DMA demand moved sharply in the opposite direction, rising from around 150,000 mt in January to April 2025 to 247,000 mt over the same period in 2026 — a trend consistent with both the ECA-driven product mix shift and the disruption to heavier fuel availability during the constrained period.

Note: The full article can be read here.

Photo credit: Alkagesta
Published: 22 July, 2026