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To see where bunker prices are going, we have to look at the bigger oil picture

Demand is forecast to rise, but figures for next year are still below the 2019 levels; it is not until 2022 that total oil demand is expected to recover, said Integr8 Fuels.

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Integr8 Fuels, the bunker trading and brokerage arm of Navig8, on Friday (14 August) published an analysis on current market conditions as well as market forces that are likely to influence bunker prices in a post-Covid-19 economy now that recovery is expected to take longer than initially predicted: 

Bunkers are a relatively small part of the overall oil market, accounting for just over 6%.  It is what is happening elsewhere in the industry that sets the underlying price in our market, but of course with a number of factors that determine if VLFSO, HSFO or MGO prices are relatively strong or relatively weak in comparison with crude oil and other product prices.

This report is an update of our end June look at the oil industry fundamental outlook and the drivers behind prices in the bunker market.  To summarise, the collapse in oil demand has been huge, but not as big as first thought.  However, expectations now are the Covid-19 impact will last longer than originally forecast.  Back in April, when the realization of what was happening became apparent, the drop in total oil demand in the second quarter was expected to be just over 23 million b/d, now that estimate is close to 16 million b/d (still incredibly big though).  Demand is forecast to continue to rise, but figures for next year are still below the 2019 levels; it is not until 2022 that total oil demand is expected to get back to the 2019 levels.

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This suggests that demand is rising but is going to take more than 18 months to ‘recover’.  Also, we have already seen a number of setbacks, with local and regional lockdowns being introduced.  On this basis we can expect demand contributions towards higher prices, but not on a straight-line basis.  We have already seen this over the past 7 weeks as crude oil prices have only edged higher in a relatively narrow range of $43-45/bbl for Brent front month futures.  This is shown in the graph below, following the collapse in Brent prices from $70/bbl at the start of the year to a low of $20/bbl at the end of April.

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The shape of price developments in the bunker sector has followed a similar pattern, a collapse from January through to late April and a gradual rebound since then, but with prices still well below those at the start of the year.

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The graph above also illustrates the narrow position of the VLSFO/HSFO differential over the past 4 months, partly a reflection of ‘smaller differentials at lower prices’, but also a reflection of more specific developments in the oil markets.  VLSFO is currently relatively weak within the price structure because it is typically a blended product and component prices are weak from the ‘hit’ in distillate/gasoline demand.  Conversely, HSFO prices are relatively strong because demand has been less affected in this market than others and also the OPEC+ crude production cuts have largely centred on more heavy, higher sulphur crudes, so constraining the supply of HSFO.

It is the balance between total oil supply and total oil demand that will determine how overall prices respond going forward.  If the analysts are correct, and we gradually move to higher demand over the next 18 months, then the question is: what happens to supply at the same time?  This means a key focus on the OPEC+ agreement and how this is working, and more specifically the positions of Saudi Arabia and Russia within the agreement.

The market has seen a massive drop in demand over the first half of this year and a position where supply was much higher than demand, i.e. a period of huge stock build.  The general outlook for the next 18 months is an increase in demand to levels just above supply, i.e. a gradual stock draw.  Forecasts tend to show OPEC+ producers moving above quotas during next year, but If OPEC can maintain full compliance to the existing agreement, then the stock draw would be greater and so prices are likely to be higher.

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The final graph illustrates how global oil stock levels could react after the massive build we have seen during the first half of this year, where by June 2020 stocks were around 1.7 billion bbls higher than at 1st January 2019.  Given the two supply scenarios, stock levels at the end of next year could be around 1 billion bbls above 1st Jan 2019 based on an OPEC ‘overproduction’, or just 0.5 billion bbls higher if OPEC sticks to the agreement.

Screen Shot 2020 08 24 at 12.45.57 PMCurrent forward curves for crude oil prices show a very flat profile for next year, rising by only $3.50/bbl by the end 2021 for Brent.  The curve for VLSFO is slightly steeper than for crude, at $42/ton higher at end 2021, which is also a reflection of a shift away from the current relative weakness in VLSFO pricing.

The implications from the graph above are not a return to prices at the start of this year, but a rise in prices and the extent dependent on how OPEC responds and how quickly demand can recover.  Analysts’ expectations for oil demand plus full OPEC compliance suggests a higher price than the current forward curve.  Within this, bunker prices will follow suit, along with more subtleties surrounding the VLSFO/HSFO price differential.  We will continue to analyse and report on these industry fundamentals.


Photo credit and source:
Integr8 Fuels
Published: 24 August, 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.

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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

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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.

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shraga kopstein on Unsplash

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

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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.

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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

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