Weekly Bunker: 2020 starts with a bang

Its 2020. VLSFO is more expensive than MGO. #WorldWar3 is one of the highest trending tags on Twitter. Brent crude has jumped 3%. We’re in for quite a year.

But first, let’s focus on the world of bunkers. With vessels across the globe waiting impatiently at anchorages for fuel and bunker barges queuing up to load VLSFO, the bottleneck appears to be at the refineries’ ability to produce enough compliant product.

This has caused physical diffs between VLSFO and IFO380 in Singapore to rise from $170 in early November to $379 on Friday. Despite reports of tightening HSFO availabilities, scrubber supporters will start to feel validated in their decisions to adopt the technology despite recent bad publicity. Even though we hear almost daily reports from suppliers advertising new availabilities of VLSFO, it is clearly struggling to keep up with demand.

Since 10 December, VLSFO has been more expensive than MGO, from $34 under in early November to $10 more expensive on Friday. As MGO generally has a higher calorific value, better availabilities and less quality risk (note the recent sediment issues reported from VLSFO in Houston), shipowners should be flexible in considering it as an alternate to any Fuel Oil. For automatic up-to-date differentials at hundreds of ports around the world, send any port name to +44 118 310 0466 on WhatsApp and the BunkerEx bot will ping back a live price.

And if the local VLSFO differentials weren’t bad enough, in the time it takes a vessel to sail from ECSA to Singapore, owners could have experienced their bunker prices jumping by $182 in the last month.

A US drone strike at Baghdad airport killing Iranian General Qasem Soleimani, apparently as a “defensive” move, roofed the market with tensions in the region rising once again. Worryingly, Iran’s Supreme Leader Ayatollah Ali Khamenei has vowed “severe revenge”. It is widely predicted that Iran will now continue to disrupt commercial shipping in the Gulf through the use of military exercises.

Whatever your role is in shipping, having an up-to-date picture on bunker prices and compliant fuel availabilities around the world will be crucial to surviving today’s volatile market.

Ishaan Hemnani

Ishaan Hemnani is the CEO of online platform, BunkerEx. Prior to founding the bunker broking company in 2017 he was a trader with World Fuel Services. Ishaan will be writing a weekly column for Splash on bunker price differentials as the global sulphur cap kicks in.
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