Shipping Reroutes Drive Record Bunker Fuel Demand
The global marine fuel market saw a significant increase in sales throughout 2024, as shipping companies diverted vessels away from the Red Sea due to escalating attacks by Yemen’s Houthis. This shift led to longer shipping routes around southern Africa, boosting demand for bunker fuel in key refueling hubs such as Singapore, Fujairah, and Rotterdam.
According to recent data, Singapore’s bunker fuel sales reached an all-time high of 54.92 million metric tons in 2024, averaging approximately 955,000 barrels per day (bpd). The United Arab Emirates’ Fujairah port also posted its first annual increase in sales after several years of decline, while Rotterdam recorded a 12% increase in Q1 2024, maintaining high levels throughout the year.
Despite hopes for a return to the Red Sea route, many shipping executives remain cautious, prolonging the elevated demand for marine fuels. This article explores the key drivers behind the surge, the outlook for 2025, and the broader impact on global trade and energy markets.
Key Drivers Behind the Surge in Marine Fuel Sales
1. Red Sea Security Risks and Shipping Diversions
The primary factor behind the jump in bunker fuel sales was the diversion of shipping routes due to security risks in the Red Sea.
- Late 2023: Houthi rebels intensified attacks on commercial vessels in the Red Sea, targeting ships linked to Israel.
- Early 2024: Most shipping companies rerouted vessels around the Cape of Good Hope, adding significant mileage to global trade routes.
- January 2024: The Houthis announced that only Israeli-linked ships would be targeted, raising hopes of a return to the Red Sea and Suez Canal.
However, uncertainty remains high, as shipping executives hesitate to fully return to the Suez Canal, prolonging the increased demand for fuel in alternative refueling hubs.
2. Record Marine Fuel Sales in Singapore and Fujairah
Singapore, the world’s largest bunkering hub, saw record-high fuel sales in 2024, reaching 54.92 million metric tons. This surge was driven by:
- Increased ship refueling due to longer voyages
- Strong demand for high-sulfur fuel oil (HSFO) from larger vessels
- A growing number of vessels choosing Singapore over Red Sea ports
Similarly, Fujairah’s fuel sales rebounded, posting its first annual increase in several years as vessels seeking alternative refueling points opted for the UAE’s strategic location.
3. Rotterdam’s Resilient Bunker Fuel Market
While the European bunker fuel market has faced structural declines, Rotterdam saw a 12% increase in Q1 2024, maintaining strong demand throughout the year.
- The increase was primarily due to higher demand for high-sulfur fuel oil (HSFO), preferred by large vessels with scrubbers.
- Total bunker fuel sales in Rotterdam fell slightly by 1% YoY to 9.06 million tons, as demand for very low-sulfur fuel oil (VLSFO) weakened.
This mixed performance highlights the importance of fuel type trends in shaping regional bunker markets.
Outlook for 2025: Will Marine Fuel Demand Normalize?
1. Potential Return to the Red Sea Route
While some analysts expect a gradual return to the Red Sea route, many shipping companies remain cautious. The reluctance to transit through the Red Sea is driven by:
- Uncertainty over long-term security stability
- Higher insurance costs for Red Sea transits
- Risk-averse corporate strategies following geopolitical tensions
If shipping companies slowly resume Red Sea navigation, bunker fuel demand in alternative ports could ease. However, a full return to normalcy remains uncertain.
2. Evolving Fuel Preferences: HSFO vs. VLSFO
Fuel preference trends are also shaping the industry’s outlook.
- High-sulfur fuel oil (HSFO) demand remains strong, particularly among large vessels equipped with scrubbers.
- Very low-sulfur fuel oil (VLSFO) demand has weakened, impacting sales in key European ports.
- Alternative fuels (LNG, biofuels) remain niche but are expected to play a larger role in the long term.
As environmental regulations tighten, the shift toward cleaner fuels could reshape the bunker fuel market in the coming years.
3. Global Economic Trends & Energy Prices
- Crude oil prices and global economic growth will influence fuel prices and shipping demand.
- If global trade slows, bunker fuel demand could decline, reversing some of the 2024 gains.
- Continued supply chain disruptions and geopolitical uncertainties could sustain elevated fuel sales in 2025.
Impact on Global Trade and Energy Markets
1. Higher Costs for Global Supply Chains
Longer shipping routes increase fuel consumption and transportation costs, impacting global trade. Higher bunker fuel demand has:
- Driven up freight costs, impacting industries reliant on global shipping.
- Increased fuel expenses for shipping companies, affecting profitability.
- Put upward pressure on consumer goods prices, particularly for industries dependent on international logistics.
2. Stronger Demand for Energy Commodities
- Rising bunker fuel consumption has contributed to higher global oil demand.
- Refineries processing marine fuels have seen stronger margins.
- Alternative fuel adoption remains slow, but regulatory changes may accelerate cleaner energy usage.
Conclusion: The Future of the Global Marine Fuel Market
The sharp increase in marine fuel demand in 2024 highlights how geopolitical events can significantly reshape global energy markets. While hopes for a return to the Red Sea route exist, shipping companies remain hesitant, suggesting strong bunker fuel demand could persist in the near term.
Key takeaways:
- Singapore, Fujairah, and Rotterdam saw major fuel sales growth in 2024.
- Geopolitical risks in the Red Sea continue to impact global shipping routes.
- HSFO demand remains strong, while VLSFO shows signs of weakening.
- Uncertainty over 2025 trends depends on security stability, economic conditions, and fuel price developments.
As global trade and energy markets evolve, businesses should closely monitor shipping trends and fuel market shifts to navigate the changing landscape.
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