The global average price for very low sulphur fuel oil (VLSFO) has shot up above $1,000 per tonne this week according to data from Ship&Bunker. Moreover, the price differential to high sulphur fuel oil (HSFO) at Singapore, the world’s largest bunkering hub has spiralled to a record $359 per tonne, a gap that was just $80 at the end of April.
According to Steve Christy, research contributor at Integr8fuels, the gasoline, and middle distillate markets have led oil prices higher over recent weeks and although refinery margins are still very high, they are falling. Tightness in products is still the main price support, according to Christy.
The extreme price moves in Singapore – and the very sizeable Hi5 as the bunker price differential is known – is also down to the fact that HSFO prices have fallen with Russian volumes finding their way east rather than west. At Europe’s largest bunkering hub, Rotterdam, by contrast, the Hi5 is half that of Singapore’s.
The rise in crude oil prices that followed the Russian invasion of Ukraine is clearly seen in bunker fuel surcharges being issued by containerlines. Across all trade lanes, the average fuel surcharges have risen close to 50%, reaching almost $600 per feu, according to container data platform, Xeneta.
“As bunker prices remain high, these surcharges are unlikely to fall any time soon, and some shippers will be seeing even higher surcharges,” an update from Xeneta this week suggested.