Legal
Navigating the fog of war: A strategic view of bunkering risks and global supply volatility
Gregory Toh and Li Xiang of Ming Law Asia LLC provide Manifold Times readers an analysis of legal pressure points and commercial strategies for shipowners procuring bunkers during turbulent times.
THE NEW REALITY OF MARCH 2026
The global bunkering industry has just been handed a stark reminder that geopolitical stability can evaporate in a single weekend. Following the US-Israeli strikes on Iranian facilities in late February, we have moved into an era of extreme price and supply volatility. The de facto closure of the Strait of Hormuz—a chokepoint for 20% of the world’s oil—has shifted the industry’s focus from profit margins to basic operational survival.
A MARKET IN SHOCK
The numbers tell a story of immediate stress. On Thursday, March 5, 2026, VLSFO delivered in Singapore was priced at $677/MT up by $174/MT in less than a week. Demand is also shifting unpredictably, with bunkering at Fujairah slowing severely after a fire last week.
While the conflict is centered in the Gulf, the supply ripples are reaching much further. There are reports of severe supply insecurity in major import-dependent nations, with some markets already warning of possible rationing.
LEGAL PRESSURE POINTS: ARE YOUR CONTRACTS “FIT FOR WAR”?
In a volatile market, the risk of non-performance by either buyer or seller significantly increases. Understanding one’s rights and obligations in a crisis is essential. We highlight legal concepts that may come into play.
- The Risk of Repudiation: Price and supply volatility can give rise to stressful disputes. Sharp changes in price may tempt either buyers or sellers to distance themselves from previously agreed forward commitments. Supply chain uncertainty can make the ability to perform unpredictable. This can give rise to stressful situations where one has to decide whether to terminate the bunker supply agreement and attempt to mitigate losses. The decision to terminate is not always a simple one because your counterparty may not always clearly indicate by words or conduct whether they intend or are able to perform or not. It would be worthwhile to consider whether there is a risk of liability for wrongful termination.
- Incorporation of terms and conditions of sale: While less common, disputes do occasionally arise as to whether a separate set of terms and conditions of sale have been validly incorporated into the bunker supply agreement. Such disputes may arise when parties are in disagreement as to whether a purchase order or bunker confirmation constitutes the binding agreement, and when a set of terms of conditions were not provided or made accessible to a counterparty.
In particular, it is worth highlighting typical boilerplate clauses in terms and conditions of sale that have a role to play in volatile markets:
- Force Majeure clauses: Force majeure clauses excuse non-performance by either party upon the occurrence of stipulated events. Whether such clauses are invoked will depend on the specific wording used. As a general rule of thumb, such clauses are not typically easily invoked but it is important to bear in mind that we are not in typical times. Such clauses invariably mention events such as war and hostilities and are therefore worth reviewing. However, it is rare that mere economic hardship would suffice to excuse non-performance.
- Subject to availability clauses: It is common for terms and conditions of sale to make a seller’s obligation to supply subject to product availability. This can be an important clause bearing in mind supply volatility and geographical shifts in demand.
- Limitation of liability clauses: It is common for terms and conditions of sale to limit a seller’s liability in the event of default. For example, a seller’s liability may be expressed to be limited to the value of fuel price or a fixed quantum.
- Exclusion of liability clauses: Equally common are exclusion of liability clauses that go further and completely exclude certain heads of liability. For example, such clauses may exclude liability for demurrage, damages for delay, loss of profit, freight or hire, and indirect losses.
COMMERCIAL STRATEGY: STRUCTURING FOR STABILITY
How should businesses respond? In volatile markets, relying solely on spot purchases can expose buyers to significant price swings.
Fuel Hedging: Fuel price risk can be managed through hedging strategies such as futures contracts, options and swaps, allowing buyers to lock in fuel prices or cap exposure to sudden spikes.
Flexible Pricing Structures: Instead of fixed-price contracts, bunker supply agreements incorporate pricing adjustment mechanisms or trigger bands, such as the BIMCO Bunker Price Adjustment Clause 2004, can be considered. Such provisions allow parties to revisit pricing when market movements exceed a defined threshold, reducing the likelihood of disputes when prices move dramatically.
CONCLUSION: MOVING BEYOND BOILERPLATE
As Singapore-based maritime lawyers with a global practice, we regularly assist clients in managing challenging and time-sensitive bunker disputes. We also assist with reviewing and amending terms and conditions of sale. Companies navigating today’s market volatility may wish to review whether their contractual framework remains fit for purpose. For further discussion on bunker supply disputes or contractual risk management in volatile markets, please feel free to contact us at: [email protected].
Photo credit: Ming Law
Published: 9 March 2026
Legal
“Yangtze Harmony”: The practical effects of enforcing bunkers arbitral awards in Rem
Helmsman says Singapore High Court in The “Yangtze Harmony” [2026] SGHC 3 confirmed that the court can lift a ‘stay’ on in rem proceedings, which were put on hold in favor of arbitration.
In shipping law, in rem proceedings are unique as a claim may be brought against the ship itself as a separate legal entity rather than the owner personally. This is what allows a ship to be arrested and used as security for such a claim.
Earlier this year, the Singapore High Court in The “Yangtze Harmony” [2026] SGHC 3 clarified an unanswered question: whether the court can lift a “stay” on in rem proceedings – which had earlier been put on hold in favor of arbitration. The court has now confirmed that it can. This means that if a party wins an arbitration, it can return to court and enforce the award as a judgment against the ship or its judicial sale proceeds.
Multi-disciplinary law firm Helmsman LLC focuses on the significance of the “Yangtze Harmony” judgment in enforcing arbitral awards in rem proceedings:
MT: How are arbitration claims against ships usually enforced in Singapore?
In shipping disputes, it is common for a claimant to start court proceedings against a ship to arrest the ship as security, even though the dispute is to be decided by arbitration. These proceedings are then stayed, pending the arbitration’s conclusion, while the claim remains secured in the form of (a) the arrested ship, or (b) its sale proceeds, or (c) any alternate form of security (such as a bank guarantee or an insurer’s letter of undertaking).
Ordinarily, arbitration awards are enforceable only against the parties named in the award (i.e. in personam). If a shipowner fails to pay, the award holder must enforce the award against the shipowner. The significance of the Yangtze Harmony judgment is that it allows an award holder to enforce the award directly against the ship which it previously arrested. This is crucial for cases against one-ship companies where the ship (or its sale proceeds) may be the only meaningful asset for recovery.
MT: If a ship is sold, where do bunker claims rank in getting paid?
While the decision makes enforcement easier, it does not affect the priority in which sale proceeds are distributed. In Singapore, judicial sale proceeds generally satisfy claims in an order of priorities. Higher ranking claims such as dues, Sheriff costs and secured claims are paid first.
A claim for bunkers supplied for a ship’s operation or maintenance are typically considered a statutory lien claim, which ranks at the bottom of the priorities ladder. Bunker suppliers are only paid from whatever funds remain and they share this equally with other similar claimants. A bunker supplier may not know what other high ranking claims exist until after the vessel is arrested or sold. If those claims are substantial, there may be little or nothing left to satisfy bunker claims.
MT: Can bunker suppliers improve their chances of getting paid?
The court has the power to alter the order of priorities when it is equitable to do so, but it is rare and requires evidence of exceptional circumstances. Ordinarily, a claim for the price of unpaid bunkers would not meet this threshold.
While the Yangtze Harmony brings welcome clarity to allow enforcement of arbitral awards as in rem judgments, this does not guarantee recovery, given the risk of priorities. Bunker suppliers in particular should carefully assess the likelihood of being paid in the event of a judicial sale before taking steps such as arresting a ship.
Photo credit: Helmsman
Published: 17 June, 2026
Incident
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