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Analysis

Contaminated bunkers: Protecting the purchaser

Gard issues pointers to fuel buyers on disputes concerning the bunker supplier and the supply contract.
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8 years ago

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Maritime protection & indemnity insurer Gard Thursday issued a notice informing the shipping community of contaminated bunkers: 

Following our earlier insight on contaminated bunkers, we now focus on the bunker supplier and the supply contract.

Before looking at these in more detail, however, we briefly summarize the situation at present.

No new developments

Little or no headway has been made in identifying the root cause of contamination and advanced testing, such as detailed Gas Chromatography combined with Mass Spectrometry (GCMS) and Fourier Transform Infrared Spectroscopy (FTIR), still remains the only reliable means of establishing whether the bunkers are contaminated. There is still a considerable backlog when it comes to advanced testing. No authority other than USCG has issued an official circular or alert on this issue to date.

The latest information available indicates that:

  1. There have been unconfirmed reports that bunker suppliers are altering their standard bunker supply forms by excluding reference to ISO 8217 and shortening the time bars from 30 days to 15 days, or even 7 days; and are also offering contaminated bunkers at a cheaper price.
  2. The contaminated fuel is being de-bunkered in various ports across the world and this presents a clear risk as it could find its way back into the supply chain. Some states may treat de-bunkered fuel as ‘waste’ which may further complicate de-bunkering activities.
  3. Vessels suffering from engine problems due to off-spec fuels may attract the attention of Port State Control Authorities, especially in states under the Riyadh MOU and Vina Del Mar MOU since the ongoing CIC in these regions are focusing on machinery.
  4. Owners and charterers should be familiar with the International Bunker Industry Association’s (IBIA) “Best practice guidance for suppliers for assuring the quality of bunkers delivered to ships” which was released early this year. The guidelines are a good source of information for members and clients in knowing how suppliers can ensure better fuel quality.

Exercise prudence when selecting a bunker supplier

There should be a process in place for selecting bunker supplier as the assurance of the quality of fuel is important and the decision should not be based on price alone. Some of the factors which should be borne in mind when selecting the supplier are:

  1. Market reputation of the supplier
  2. Whether the supplier has any recent history of being involved in the supply of contaminated bunkers
  3. Supplier’s financial standing
  4. Whether supplier can furnish evidence of insurance for poor quality bunkers
  5. Extent of control exercised over the bunker barge by the supplier
  6. Terms and conditions offered. Specifically, supplier’s willingness to renegotiate the contract

Pay attention to the bunker contract

Buyers, i.e. owners and charterers, usually may have a difficult time negotiating contractual terms with the supplier or trader. However, in light of the current situation where suppliers are potentially facing expensive claims, they may be more forthcoming than previously to discuss the contractual terms. Some of the key points at the contractual stage are:

  1. Clearly describe the fuel requested: The bunker order should contain a clear description of the bunkers to be supplied as the supplier is obliged to supply fuel as requested. At the requisition stage, it may be mentioned to the supplier that the bunkers should be free of various anomalous components and be fit for purpose. It is worth noting that although the buyer may deem the fuel to be unsuitable due to contaminants and in breach of Cl.5 of ISO 8217, there is a valid argument against this line of thought that the fuel was nonetheless within contractual parameters. It remains to be seen how courts will interpret the openly worded Cl.5.
     
  2. Vet the bunker contract: Carefully read the contract. It may also be compared with previous contracts to ascertain if key contractual terms have been altered. These will be clauses typically referring to:
  • ISO 8217;
  • the time bar; and
  • disclaimer excluding warranty as to fitness of the fuel.

It is in the suppliers’ interest for the contract to exclude any reference to ISO 8217 and/or for time bars to be excessively short if there are no clauses warranting that the fuel must be fit for consumption. Ensure that the supply contract is not worded in favour of the supplier. It is recommended to use BIMCO’s Standard Bunker Contract as it is more evenly balanced. With regards to ISO 8217 contracts should expressly specify that anomalous components must not be present. Simply stating that ISO 8217 standard must be met may not be sufficient.

  1. Pre-delivery testing should be part of the contract: It is best if buyers (owners or charterers) know beforehand that the fuel supplied conforms to the specs and is not in any way contaminated. This is achievable only through advanced screening or testing, such as detailed GCMS, FTIR etc. Try making the supplier contractually responsible for such testing and if possible also obtain information as to where the bunkers are sourced from. This information will influence how adamant a buyer should be about pre-delivery testing.
     
  2. Know how the selected forum treats bunker disputes: If unable to renegotiate the law and jurisdiction clause governing the supply contract, buyers should at least familiarise themselves with how the relevant jurisdiction treats bunker disputes.
     
  3. Be aware that the full extent of loss may not be claimable: Bunker supply contracts invariably have a limitation of liability clause, usually limited to the cost of the bunkers, and exclude consequential losses, i.e. a claim for lost time and engine repair cannot be put forward. Depending on the bargaining power of the buyer, the wording of the clause could be re-negotiated.

Claiming against the supplier

  1. In bunker disputes, evidence in the form of bunker samples, test reports, damaged parts, records etc., is vital. A comprehensive list of documents which may be needed can be found by clicking here. When conducting additional testing and survey of damage parts, the bunker supplier should be invited to witness the same.
  2. Very often the physical supplier and the contractual supplier are not the same. In the absence of a contractual link between the buyer and the physical supplier, any claim will most likely have to be made in tort.
  3. Claim against the contractual supplier is very much dependent on the jurisdiction it is heard in and on the terms and conditions of the bunker contract.
  4. Claimants, i.e. buyers of bunkers, will have to shoulder the burden of proof to show that the bunkers supplied were not of the contractual description and that the off-spec bunkers were indeed the cause of machinery damage. Whilst the former can easily be satisfied with the advanced test results, for the latter, detailed documentary evidence, as mentioned in ‘a’ above, and expert evidence may be needed.
  5. Upon purchase a buyer should reserve their position vis-à-vis the time bar in the bunker contract. Such reservations may not work in every jurisdiction, nonetheless this precautionary step is still advisable. There is also an argument, though not tested, that the court will take cognizance of the fact that these contaminants cannot be detected in a short time period.
  6. As far as English Law is concerned the position is that under Section 14 of Sale of Goods Act 1979 the implied terms of fitness for purpose and satisfactory quality will apply assuming the bunker contract is construed as a contract of sale, though it was not in the OW litigation.
  7. Members and clients are reminded to notify the club as soon as contaminants are detected or suspected.

Conclusion

Bunker quality disputes can be very lengthy, costly and complex but can be avoided if a sound decision is made as regards selection of the supplier and negotiation of the bunker contract. Increased dialogue between suppliers and buyers (time charterers or owners of voyage chartered vessels) may be needed to achieve the right level of understanding and cooperation.

Related: Gard: Contaminated bunker issue continues to spread

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Published: 17 September, 2018
 

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Bunker Fuel Quality

FOBAS report warns of growing operational risks from ISO-compliant bunker fuels

LR’s latest FOBAS Fuel Quality Report reveals that the biggest fuel quality risks are no longer confined to off-specification fuels, with some compliant fuels creating operational challenges.
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1 week ago

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July 15, 2026

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New FOBAS report warns growing operational risks from ISO-compliant bunker fuels

Classification society Lloyd’s Register (LR) on Tuesday (14 July) warned that ship operators are facing a growing risk from fuels that appear compliant under routine ISO 8217 testing but still present operational risks once onboard.

According to LR’s latest Fuel Oil Bunker Analysis and Advisory Service (FOBAS) Fuel Quality Report, covering the first half of 2026, off-specification fuels remain a persistent challenge. 

However, some of the most disruptive cases now involve fuels that pass routine compliance testing but show poor stability or compatibility, or contain non-conventional blend components that are only identified through more detailed investigative analysis.

Several incidents investigated highlighted this trend. In March and April, a number of vessels reported operational difficulties after bunkering fuel in a major bunkering hub. Further forensic analysis found that many of the fuels contained elevated concentrations of Estonian shale oil, in some cases estimated to be around 10-15%.

While shale oil is recognised within ISO 8217 as an acceptable blend component, FOBAS investigations found that higher concentrations can be associated with fuel instability and operational issues affecting filters, separators and fuel pumps.

The report also shows that fuel quality variability remains stubbornly high. Off-specification cases remained elevated throughout the first six months of 2026, suggesting that quality issues are no longer isolated events but a more persistent feature of today’s marine fuel supply chain.

The most common recurring issues included sulphur exceedances, excessive water content, sediment and stability problems, elevated catalytic fines, sodium contamination and low flash point distillate fuels.

At the same time, biofuels (especially FAME blends) are continuing to grow without being a primary source of quality issues. Where issues occurred in blended fuels, they were generally associated with the conventional VLSFO component rather than the FAME fraction.

The report concluded that operators will need to adopt a more proactive approach to fuel management as marine fuels become more diverse and fuel quality risks become harder to identify through routine compliance testing alone.

Greater emphasis on fuel stability, compatibility and understanding fuel composition will be critical to reducing operational disruption and maintaining vessel performance.

Murray Kirkwood, Fuel Specialist Consultant, Lloyd’s Register, said: “The findings from our latest report show that fuel quality risk is evolving. The challenge is no longer simply identifying fuels that fail specification. Increasingly, operators are encountering fuels that meet the required limits but still create operational difficulties once they are stored, handled and used onboard.

“As fuel blending becomes more complex, the distinction that matters is increasingly not between on-spec and off-spec fuel, but between fuels that are operationally resilient and fuels that are operationally fragile. Understanding that difference is becoming essential for shipowners and operators.”

The latest findings reinforced FOBAS’ long-standing view that effective fuel management increasingly depends on understanding fuel behaviour rather than relying solely on pass-or-fail specification testing.

By combining routine fuel quality monitoring with forensic investigation of operational incidents, FOBAS provides shipowners with a clearer understanding of emerging fuel quality risks as the industry continues its transition to a more diverse and complex fuel landscape.

Note: The FOBAS Fuel Insight: Fuel Quality Report H1 2026 is available at FOBAS Fuel Insight: Fuel quality reports | LR

 

Photo credit: Lloyd’s Register
Published: 15 July, 2026

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Interview

Interview: Alkagesta navigates risk from bunkering ops during turbulent times

As the industry navigates this period of uncertainty, the key question is no longer ‘what will fuel cost?’ but rather ‘will fuel be available?’, highlights Mithat Çiftçioğlu.
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3 months ago

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May 7, 2026

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Mithat Çiftçioğlu, Marine Fuels Director at Alkagesta, shared his opinion on risk management for bunkering operations under current geopolitical tensions through the April edition of shipping magazine Deniz Ticaret.

The maritime publication, part of the Turkish Chamber of Shipping (İMEAK Deniz Ticaret Odası), has given Manifold Times permission to republish the article:

Fueling Ships in Turbulent Times

From Oil Shock to Fuel Access Crisis: A New Risk Map for Maritime 2026

The final weeks of the first quarter of 2026 mark one of the most complex periods in recent years for global energy and maritime markets. The sharp rise in oil and refined product prices since February 28 may look like a classic energy shock at first glance, but developments in the maritime sector point to a far deeper structural rupture.

What is being debated in the market today is no longer just oil prices. For traders and shipowners operating in the maritime sector and bunker market, the real issue is not the price of fuel — it is access to fuel. The fundamental question in the market has shifted: not what will the price of fuel be, but will fuel even be available?

In light of the Force Majeure cancellations at Asian ports over the past two weeks, another question must also be considered: Will pre-agreed bunker supply contracts actually be delivered?

From Oil Prices to Logistical Reality

Tensions in the Middle East have created a strong geopolitical risk premium in the oil market. Brent crude briefly surpassed the $100 per barrel mark, triggering a search for a new equilibrium across markets. This will inevitably bring inflation and recession back onto the global agenda in the months ahead.

But the rise in oil prices does not only reflect the risk of supply disruption — it also signals the return of one of the most fragile chokepoints in global energy trade:

The Strait of Hormuz

Approximately one-third of the world’s oil trade passes through this narrow waterway. Around 20 million barrels of oil and petroleum products transit Hormuz daily. Any disruption here would therefore affect not only oil prices, but also global refined product flows and the bunker market directly.

Why Strategic Oil Reserves Are Not the Solution

A commonly proposed solution in energy crises is the release of strategic petroleum reserves. However, releasing these reserves does not directly resolve a bunker crisis. Strategic reserves consist of crude oil. To produce bunker fuel, the following chain must be completed:

Crude oil → Refinery → Product logistics → Bunker port

This process takes time. Strategic reserves can temporarily stabilize oil prices, but they cannot solve the access problem in the bunker market in the short term.

Furthermore, the announced reserve release of 400 million barrels, to be drawn down at a rate of 2.5–3 million barrels per day, can only cover a small fraction of the estimated daily loss from the Middle East — optimistically 8–10 million barrels, pessimistically 18–20 million barrels per day.

A Historic Surge in Bunker Fuel Prices

The per-ton price of VLSFO (0.5% sulfur) bunker fuel has surpassed $1,000, reaching approximately double pre-war levels. This also represents some of the highest prices seen since July 2022.

While prices at bunker hubs such as Singapore and Fujairah are approaching $1,100 per ton, European markets have remained comparatively lower.

The Real Problem Is Not Price — It Is Fuel Access

Obtaining bunker quotes for April has become increasingly difficult, particularly at Asian ports. Even where shipowners and traders can secure quotes, the absence of supply guarantees makes pricing extremely challenging.

A senior executive at Oldendorff Carriers summarized the situation in these words:

“We cannot price cargo because we cannot calculate fuel costs; we cannot calculate fuel costs because there is no supply guarantee.”

The CEO of Maersk has compared the current situation to the pandemic era, stating that companies are attempting to source fuel through methods they have never tried before in order to keep global shipping networks supplied.

While supply is tight and prices are near their peak in Singapore and Fujairah, Rotterdam appears relatively more balanced. However, as the conflict drags on, risk perception in European markets is also rising.

The surge in bunker prices will not only increase costs — it will also affect global maritime transport capacity. Ships are expected to reduce their speeds to conserve fuel. This could lead to a reduction in effective carrying capacity, creating new logistical bottlenecks in global trade.

The importance of working with reliable, long-term partners has never been more apparent than during a crisis such as this.

The Widening Price Spread Between Fuel Types

A notable development in the bunker market in recent weeks is the rapid widening of price differentials between different fuel types. Two spreads in particular have expanded significantly:

  • Marine Gas Oil (MGO) – VLSFO
  • VLSFO – HSFO

Rising demand for distillate products, refinery production balances, and regional supply tightness are all contributing to this widening. As a result, bunker purchases have become not merely a matter of price level, but a strategic decision tied to product type and port selection.

An Unexpected Development: Biofuels Becoming Competitive

Another noteworthy development in the bunker market is that biofuels have remained at relatively competitive price levels. This creates two important opportunities for shipowners.

On one hand, biofuels remain competitively priced in certain markets. On the other, they offer a means of compliance with new regulations entering into force in Europe — particularly the FuelEU Maritime and EU ETS frameworks, which require reductions in carbon intensity. In this context, biofuels have become a strategic option for many shipowners.

Conclusion: Active Bunker Management Is The New Normal

The 2026 bunker market presents one of the most complex energy trading environments in recent years. The rise in oil prices, geopolitical risk at the Strait of Hormuz, tightness in physical fuel supply, and widening price spreads between fuel types have made bunker fuel management more critical than ever.

The prevailing view in energy markets is that as long as the risk at the Strait of Hormuz persists, turbulence in the bunker market will persist with it. As time passes, the depletion of commercial stocks may deepen the existing supply tightness further.

For this reason, the current situation is viewed not merely as an energy crisis, but as a new stress scenario testing the logistical infrastructure of global trade.

The view increasingly heard across energy markets is this:

“As long as Hormuz remains closed, it will not be oil prices but fuel access that constitutes the defining risk for global shipping.”

Finally, for shipowners and operators, bunker strategies are shifting away from a passive purchasing approach toward a model grounded in active risk management.

 

Photo and article credit: Deniz Ticaret
Published: 7 May 2026

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Analysis

T&E: Overreliance on traditional bunker fuels costs shipping USD 395 million a day due to Iran conflict

Development has made alternative fuels increasingly more competitive, states Eloi Nordé, shipping policy officer at T&E.
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Published

4 months ago

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April 2, 2026

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The Hormuz crisis adds over 300 million a day to shippings fossil fuels bills

The European Federation for Transport and Environment (T&E) on 27 March highlighted the adoption of green marine fuels would reduce the shipping industry’s exposure to fuel price shocks in future.

It noted shipping companies are spending an extra €340 million (USD 394.74 million) a day in additional fuel costs as a result of the latest conflict in the Gulf.

As 99% of the global fleet runs on fossil fuels, the industry is directly exposed to fuel price volatility and supply disruptions. Efficiency measures, electrification and e-fuels would reduce the industry’s exposure to price fluctuations.

According to T&E, marine fuel prices have escalated rapidly, with VLSFO reaching €941 per tonne in Singapore, up 223% since the start of 2026. At the same time, LNG prices have risen by 72% since early March. Since February 28, shipping companies have incurred more than €4.6 billion in additional fuel costs.

The development has made alternative fuels increasingly more competitive. As fossil fuel prices reach record highs again, the cost gap with e-fuels is narrowing.

T&E’s research shows that the cost gap between marine gas oil – one of the more expensive fossil fuels – and e-fuels has shrunk to near parity (+5%) in some ports.

Hormuz oil crisis boosts potential e fuel competitiveness

While the trend may be temporary, it shows that the volatility of fossil fuel markets offsets much of the structural cost disadvantage of clean fuels.

“Chaos in the Strait of Hormuz is putting global maritime trade under the spotlight. But it’s on the oil markets where its impact will be felt the most. The war is costing the industry millions every day,” said Eloi Nordé, shipping policy officer at T&E.

“Some governments and parts of the industry have spent the last year bashing green maritime measures as being too expensive, yet those costs pale in comparison to this super-disruption.

“If anything, this crisis should be the catalyst for more investment in European e-fuels and greater uptake of energy efficiency measures to avoid fossil fuel shocks in the future.”

 

Photo credit: European Federation for Transport and Environment
Published: 2 April 2026

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