Singapore Records Surge In Bunker Fuel Sales Amid Red Sea Crisis

Singapore, one of the busiest ports in the world, has seen a notable increase in bunker fuel sales following the Red Sea shipping crisis. The port authority’s data shows a significant increase, with volumes in January rising by 12% over the same month last year. This comes after a similarly steep spike noted in December, indicating the persistent effects of the unrest in the area on maritime trade.

The conflict in the Red Sea region, started by Iran-backed Houthi rebels targeting merchant vessels in support of Hamas against Israel, has resulted in a strategic shift in shipping patterns. Many shipowners now divert their vessels from the hazardous region, bypassing the conventional Suez Canal traversing for a safer route around the Cape of Good Hope.

Singapore has developed as an important refuelling stop for vessels traversing these new routes, mainly because of its strategic location as one of the last ports before entering the Indian Ocean. Simon Neo, executive director of ship-refueling consultant SDE International Pte, stated that ships wanting to refuel before starting the lengthier trips that the Red Sea issue requires are the reason behind the rise in demand in Singapore.

Bunker fuel consumption has increased due to longer sailing distances and, in some circumstances, faster sailing speeds. As a result, ships are refuelling at important hubs like Singapore and less trafficked ports like Durban and Walvis Bay along their journey across Africa. According to S&P Global Commodity Insights’ lead analyst for tanker shipping and alternative fuels, Fotios Katsoulas, the change in shipping routes may result in a 5% increase in demand for bunkering.

Singapore had a notable spike in bunker sales in December, selling almost 5 million metric tons of conventional bunker fuel, a 19% increase from November. The prolonged Red Sea situation forced many ships, especially container ships, to choose longer routes between Asia and Europe, so more ships were lifting bunkers in the port in December.

Ship activity changed due to the December surge in demand for bunker fuel, with larger stems being lifted by ships leaving the Red Sea. Singapore’s advantageous location near vital shipping lanes and its affordable bunker rates have made it a popular destination for refuelling, increasing sales even more.

Industry insiders predict that as long as ships keep rerouting around Africa to escape the Red Sea situation, there will be a significant demand for bunkering in Singapore. Unfortunately, the increasing demand has strained supply, especially for Very Low Sulfur Fuel Oil (VLSFO), since many suppliers find it challenging to fulfil delivery commitments, resulting in delivery delays.

Reference: SCMP, Engine. Online

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