Tahra Sergeant, International Bunker Industry Association’s (IBIA) Regional Manager of Africa and Global Head of Events, on Monday (1 July) shared on how the Red Sea crisis has reshaped global bunkering demand, particularly in Africa, Singapore, European ports and New York.

The following are excerpts of the article by Sergeant: 

The continued attacks on commercial shipping in the Red Sea have impacted the overall size and patterns of global bunker demand. In simplest terms increased distances travelled and increased speeds have added somewhere between 800,000 and 1,000,000 metric tons per month to global bunker demand. The bunker supply industry has faced two challenges to increase overall supply volumes and to adjust location of bunker supply to reflect differing demand patterns.

Increases in bunkering activity, well outside normal fluctuations, continue to be seen at ports on the African coastline, offshore Africa and Islands close to the Africa Continent. A predictable decrease in bunkering activity has been seen in supply ports of the Eastern Mediterranean. Further significant demand increases are felt at Asian ports (particularly) Singapore, European ports (particularly ARA (Amsterdam, Rotterdam and Antwerp) and Algeciras) and even at New York on the US East Coast.

Overall, the bunker supply industry has been able to both add volume and absorb these shifts in demand although this has not been without its challenges. Ports needed to quickly increase supply with uncertainty over future demand and notably as South Africa market has had to deal with specific localized supply challenges.

This report summarises feedback from various industry sources, focusing on the magnitude of bunker sales, the ability to quantify these changes, supply challenges, and future demand expectations:

Impact on bunker demand:

Africa:

Mauritius (Port Louis): The strategic position of Mauritius makes the island an important bunkering location. Demand for bunkers for most of 2023 was approximately 30,000 metric tons per month which has now increased in Q1 2024 to 60,000 to 65,000 metric tons per month.  

Mozambique: Maputo, Nacala and offshore Mozambique Channel:  Bunker volumes in these locations were limited for most of 2023 but have now anecdotally significantly increased.

South Africa: For the majority of 2023 South African bunker volumes were approximately 130,000 metric tons per month. In the crucial period of Q1 2024 this volume has unfortunately dropped to 80,000 metric tons as explained below.

• Durban and Richards Bay: Traditionally were significant bunker locations on South African Coast but impacted by local refinery closures.  Limited ability to increase volume.
• Algoa Bay:  Supplied between 60,000 to 70,000 metric tons per month until Q4 2023 when supply was shut down because of tax and licensing dispute with South African authorities.  This supply location remains inactive and is a major loss for South African bunker supply options.  
• Cape Town: 2023, limited supply from Astron Refinery.  Demand in 2024 for bunkers supply in Cape Town has increased to approximately 40,000 metric tons per month. With a surplus.

Namibia:  Walvis Bay was a low to medium volume supply location in 2023 with demand reportedly doubling by Q1 2024

West African (WAF) Offshore Supply:  Significant volumes of bunkers are supplied in lightering locations off major West African ports.  These locations are not ideally suited for ships diverting around Africa.  Early 2023 bunker volumes were approximately 210,000 metric tons per month, Q1 2024 closer to 250,000 metric tons.

Europe:

Canary Islands (Spain):  Strategically located off the coast of Africa the Canary Islands has seen bunker demand increase from 315,000 metric tons per month in early 2023 to 370,000 metric tons per month in Q1 2024

Algeciras (Spain):  2023 demand increased from 270,000 metric tons per month to 300,000 metric tons per month in Q1 2024.  However, the western Mediterranean is largely unchanged in demand as ports such as Gibraltar have lost some demand.

Eastern Mediterranean:  Reportedly, demand is down in all locations but limited hard statistical data is available to support this conclusion.  

ARA (Amsterdam, Rotterdam and Antwerp):  Demand has risen from 1.45 million metric tons in 2023 to 1.58 million metric tons in Q1 2024.

North America:

New York: Demand has risen from 350,000 metric tons per month in 2023 to 400,000 metric tons per month in Q1 2024 due to container services usually transiting the Mediterranean not diverting around Africa.

Asia

Singapore: Demand has risen from 4.23 million metric tons per month in 2023 to 4.62 million metric tons per month in Q1 2024.  Singapore has absorbed 40% of the increased demand created by the Red Sea crisis.

Conclusions

The Red Sea crisis that developed in Q4 of 2023 has caused some significant and continuing shifts in both demand patterns and pricing. 

The existing fossil fuel based bunker supply industry and the buyers of bunkers have a well-proven and cooperative ability to adjust to supply and price disruptions whether created by regulation, geopolitical tensions or natural occurrences.

These adjustments are at times challenging and can be damaging or beneficial to different supply locations.

Prices will rise, perhaps to modify over time, but shifts in demand will be recognised and covered. The energy transition within shipping provides potentially more significant challenges in that new lower GHG fuels will at first only be available in limited ports and smaller volumes. Geopolitical disruption may be more challenging to the future bunker supply chain.

Note: The full article by IBIA’s Tahra Sergeant can be found here.

Photo credit: International Bunker Industry Association
Published: 5 July, 2024