Bunker Market Volatility Driven by Geopolitics and Supply Constraints

The global bunker market experienced significant volatility in September due to geopolitical and supply-side factors. The ongoing conflict between the United States and Iran increased the geopolitical risk premium, driving up prices for crude oil and oil products.

Tight distillate supplies, particularly diesel and gasoil, contributed to strong support for MGO LS bunker prices. VLSFO blending-component constraints also limited availability and supported VLSFO prices relative to crude and HSFO.

The Middle East conflict and Strait of Hormuz disruptions kept the geopolitical risk premium elevated, driving bunker market volatility and pushing Brent above $110/bbl in September. The 380 HSFO index rose by $79.31, from $622.00/MT at the end of August to $701.31/MT.

The MABUX Global Scrubber Spread (SS) narrowed in September, declining by $9.95, from $153.64 at the end of August to $143.69. The SS Spread is expected to maintain a moderate downward trend in October.