Red Sea Diversion Spurs Bunker Demand Surge

Due to increasing hostilities in the Red Sea, Asia-bound oil tankers are diverting from their usual route through the Bab al-Mandeb Strait. This re-routing results in these vessels sailing through the Suez Canal into the Mediterranean and then around the Cape of Good Hope.

According to Peninsula, a marine fuels supplier, this diversion will lead to increased demand for bunkering at alternative ports on these routes, including Port Said, Malta, Gibraltar, Algeciras, Las Palmas, Algoa Bay, and Port Louis.

The re-routing could more than double the tonne-mile demand compared to the Bab al-Mandeb eastbound exit. Peninsula estimates that for a typical Suezmax tanker, this diversion will require around 1,500 mt of additional fuel at an estimated cost of $800,000, and emit 3,800 mt of additional CO2.

The industry could face a sudden increase in fuel consumption due to these changes, which will be more complex than just plotting a longer course. This recalibration of voyage economics may lead to tighter global bunker supply at a time when demand already outstrips supply.