Business

Integr8 Fuels: Where are we and do we know where are we going?

With a near 70% collapse in crude prices, VLSFO prices in Singapore and Fujairah have also fallen by 66%; however, demand impact on bunker market is expected to be limited.

Published

6 years ago

April 3, 2020

Admin

[vc_row][vc_column][vc_column_text]Integr8 Fuels, the bunker trading and brokerage arm of Navig8, on Thursday (2 April) published an article analysing the impact of current oil demand pricing on the bunker market:

Where are we and do we know where are we going?

Overview

There is a little more clarity in oil market pricing, but still huge uncertainty on where things are going. It was just a few weeks ago when news of the coronavirus started to hit and OPEC put forward a proposal to cut production by around 1.5 million b/d, but only if there was the support of the OPEC+ group (principally Russia). The agreement didn’t happen, Saudi opened the taps and oil prices collapsed. With hindsight the proposed 1.5 million b/d cut was ‘a drop in the ocean’, with analysts now indicating that global oil demand could be an unprecedented 20 million b/d lower in April 2020 than in April 2019, and also some 4-6 million b/d down for this year as a whole. So, near-term oil supply is up by around 2-3 million b/d and demand down by around 15- 20 million b/d. Markets tend to tell you almost everything and we have seen a near 70% collapse in crude prices since the start of the year to hit 18-year lows. At the same time the crude market has switched from backwardation to steep contango, bringing storage into play.

So, what about bunker prices. We are no different in terms of being driven by absolute prices in the oil market and VLSFO in Singapore and Fujairah is around $500/ton lower than at the start of the year (minus 66%). Prices in Rotterdam are below those in Singapore and Fujairah and so the absolute drop has not been as great, at around $370/ton, but in percentage terms it is more-or-less the same at 63% lower.

Understandably, there have been even greater pressures in the jet and gasoline markets, where demand destruction is at extreme levels. It has been well documented on how airlines are suffering, and this is clearly seen by the demand for jet fuel, which is down by a massive 77%.

In volume terms, the loss in gasoline demand is even greater than jet, but with the gasoline market almost four times bigger, the percentage drop is around 26%; still hugely significant. The demand impact in the bunker market has been relatively limited, with fuel oil consumption down by an estimated 7%.

The collapse in oil prices is clearly the headline news, but relationships across the barrel have altered significantly. Before this happened, on a weight basis in NW Europe, jet fuel was around $120-140/ton above Brent, gasoline $90-110/ton and VLSFO $30- 50/ton higher than Brent. The loss of jet and gasoline demand meant the crack spreads for these products have tended to fall further than other products. However, over the past couple of days we have seen physical crude oil prices fall even further and faster than products and, as shown in the graph, crack spreads have widened. At the same time the relative price of VLSFO has risen and is now priced similar to jet and above gasoline.

For refiners the question is not about absolute prices, but the difference between crude and product prices and what this means for their refinery margins. In such a violent market there are always leads and lags that affect the margin on a day-to-day basis, but the current downwards pressures on physical crude oil prices are so extreme, and on paper margins have soared. However, the reality out there will be very different for different refiners and for those with positive margins they will continue to process, whether the demand is there or not. We are in a vicious cycle; there is too much crude and to generate buyers it has to be sold (or stored) at a profit.

There are already stories of some refiners severely cutting runs. Some of the most vulnerable are likely to be land-locked, without endless storage or the ability to clear products. For the rest it will be different for different refiners, depending on the type, infrastructure and connectivity of the refinery. But if refinery margins stay positive and storage economics work and there is somewhere to put the products, then those refiners that can will continue to run; we will just see huge builds in products stocks.

The consequence of the hike in oil supply and the downfall in demand is these massive builds in oil stocks. This is yet to show in weekly stocks reports, but it is coming, and the oil price structure already reflects this. Backwardation has been replaced by steep contango in the crude market, and for Brent the difference between physical and front month futures prices is now $7/bbl, with the contango running at around $17/bbl over the next 6 months This means storage economics are now very favourable (traders will still make money storing crude on a VLCC and paying $140,000/day for it). It is just that supply goes into storage rather than into consumption.

Clearly the longer we go down this road, the bigger the stock-build will be and so take longer to unwind. So how do things change? We either see a sharp rebound in demand or a major cutback in supply, or a combination of both. On the demand side, current expectations (which can obviously change) are that things will ease from May onwards, but that demand will still be well below 2019 levels for most of this year, plus there is also the issue of recession; so no quick fix here. This then points to any potential cutback in supply, which in the near/medium term would seem to need Russia to come back to the table and approve an OPEC+ agreement. If this is the case, then the cutback will have to be much bigger than the 1.5 million b/d proposed last time round. Global politics may yet come up with something else, but what we don’t know. Alternatively, could we see the industrial collapse of oil production at a field, company or even country level? Without any of these, stocks will continue to build, oil prices are going to remain low and could fall even further.

Source and photo credit: Integr8 Fuels
Published: 3 April, 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.

Published

3 hours ago

August 14, 2026

Admin

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

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.

Published

3 hours ago

August 14, 2026

Admin

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

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.

Published

3 hours ago

August 14, 2026

Admin

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