Bunker Fuel Prices Surge as Strait of Hormuz Tensions Rise

Bunker fuel prices have risen across major European and African ports since last Friday, with tight supply conditions at the Gibraltar Strait ports. The price of very low sulfur fuel oil (VLSFO) increased in Rotterdam ($67/mt), Durban ($65/mt), and Gibraltar ($31/mt). Low sulfur marine gas oil (LSMGO) also saw hikes in Gibraltar ($115/mt), Durban ($73/mt), and Rotterdam ($43/mt). High sulfur fuel oil (HSFO) prices rose in Durban ($41/mt), Gibraltar ($24/mt), and Rotterdam ($3/mt).

The price gap between Gibraltar and Rotterdam for LSMGO has widened significantly, reaching $189/mt, while the VLSFO premium narrowed to $36/mt. Gibraltar’s HSFO premium over Rotterdam expanded by $21/mt. Suppliers are facing delays, with lead times of 7-10 days recommended for prompt fuel deliveries. Around nine vessels are currently waiting for bunkers in Gibraltar, with delivery delays ranging from a few hours to over a day.

Brent crude prices have climbed to $102.55/bbl, driven by rising tensions in the Strait of Hormuz, where multiple commercial vessels were attacked over the weekend. The UK Maritime Trade Operations (UKMTO) reported strikes on four vessels, including an oil tanker that caught fire. Analysts from ING Bank noted that these attacks highlight ongoing regional instability. However, Brent’s upward momentum was tempered by the G7’s announcement of a coordinated release of up to 100 million barrels of emergency oil stocks over the next four months, aimed at easing supply concerns.

The latest action by the G7 reflects growing tightness in the global oil market, according to ING Bank analysts. The U.S. also issued a request for proposals to exchange up to 40 million barrels from its Strategic Petroleum Reserves. Despite the downward pressure from these stock releases, analysts warn that tensions in key oil transit routes could continue to push prices higher.