Marine fuel prices have surged since the outbreak of the U.S.-Iran war on February 28, adding significant costs for shipping companies already facing higher insurance premiums and operational expenses. Although prices have retreated from their initial peaks, bunker markets remain well above pre-conflict levels, with renewed increases and continued supply constraints keeping pressure on vessel operators.
Singapore, the world’s largest bunkering hub, has seen very-low-sulphur fuel oil (VLSFO) rise from $509 per tonne immediately before the conflict to $886 per tonne in early October, an increase of approximately 74%. High-sulphur fuel oil (HSFO) has also climbed, rising from $432 to $764 per tonne. For a vessel purchasing 3,000 tonnes of VLSFO, the increase represents more than $1.1 million in additional fuel costs compared with pre-war prices.
Disruptions to oil shipments through the Strait of Hormuz have contributed to the surge, while attacks on Russian energy infrastructure and strong demand for diesel have further tightened supplies. Refineries producing diesel have also faced competing demands for blending components used in compliant marine fuels, adding pressure to the VLSFO market.
Fuel availability has become another challenge alongside rising prices. Singapore has experienced extended lead times for VLSFO, while Fujairah has faced periods of severely limited prompt supply. Constraints have also affected other major bunkering regions, including Japan and northern Europe, prompting some operators to purchase smaller quantities, refuel earlier or consider alternative ports.
The price gap between VLSFO and HSFO has also made scrubber-equipped vessels more competitive on fuel costs. Scrubbers allow ships to use higher-sulphur fuel oil while meeting applicable emissions requirements. As the discount on HSFO has widened, vessels equipped with these systems have gained a greater cost advantage over ships that rely on VLSFO, although actual savings depend on fuel prices and operating costs.
With fuel prices remaining volatile and supply disruptions continuing to affect major bunkering hubs, shipping companies face difficult decisions around purchasing strategies, voyage planning and fuel availability. While the initial market shock has eased, elevated bunker costs remain a significant factor shaping the economics of global shipping.
