Red Sea ship diversions boost bunker demand, prices in Africa, Mediterranean

Red Sea ship diversions boost bunker demand, prices in Africa, Mediterranean

The alteration of shipping routes around Africa to evade potential attacks in the Red Sea is reshaping refueling dynamics and increasing demand for bunker fuel in distant ports, spanning from Mauritius to South Africa to the Canary Islands. Vessels are anticipated to increase refueling activities in Singapore and Rotterdam, the two busiest bunkering ports known for competitive fuel prices, as a precautionary measure against uncertainties related to route changes, as indicated by traders and analysts.

Tensions in the Middle East have escalated due to attacks by Yemen’s Houthi militia on merchant ships in the Red Sea, coupled with retaliatory U.S. strikes, amidst the ongoing Gaza conflict. The Houthi attacks, aligned with Iran, are purportedly in support of Palestinians and focus on a route responsible for approximately 15% of global shipping traffic, serving as a crucial link between Europe and Asia. In response, numerous large vessels have opted to reroute around the southern tip of Africa, adding 10-14 days to their travel to avoid potential drone and missile attacks by the Houthis.

John A. Bassadone, founder and CEO of independent bunker supplier Peninsula, highlighted the consequences of this redirection, stating, “Ships are diverting away from the Red Sea and re-routing around the coast of South and West Africa – this increased traffic has created huge congestion in bunkering ports around Africa and placed significant pressure on port infrastructure,” according to Reuters. This has resulted in an upswing in bunker fuel demand at ports including Mauritius’ Port Louis, Gibraltar, and ports in the Canary Islands and South Africa, with notable sales spikes in Cape Town and Durban.

The surge in demand has led to a 15% increase in prices for low-sulphur bunker fuel delivered at Cape Town, reaching almost $800 per metric ton since mid-November when the attacks commenced, according to data from bunker supplier Integr8 Fuels. Philip Wang Balke, a senior bunker trader for Africa at Integr8, noted that supply is tightening as more shipowners and operators proactively secure fuel in advance to ensure sufficient supplies.

Initially driven by container ships, the diversion away from the Red Sea is now influencing oil tankers and dry bulk carriers, redirecting bunker demand to West Mediterranean ports at the expense of East Mediterranean, industry sources mentioned. Peninsula’s Bassadone anticipated increased demand in Las Palmas and Western Mediterranean ports, projecting that African ports might surpass capacity.

Although Singapore and Rotterdam have not experienced a surge in demand yet, industry insiders predict an uptick in buying over the next few weeks as ships opt for competitive prices. An Asia-based bunkering manager explained that vessels, especially those prone to higher ton-mileage or uncertainties, are likely to fill up their tanks in advance to potentially save costs, considering the possibility of ending up at expensive ports.

In mid-January, spot premiums for prompt low-sulphur bunker fuel delivered at Singapore rose to $25 to $30 per metric ton above cargo quotes, up from about $20 in early January, as reported by industry sources.

Source: Reuters

Chief Maloubier later were recalled: "After just about all, all of us agreed having a modest enjoy factory, Blancpain, to develop the task: a close look using a dark dial, significant, striking numerals and also apparent marks, plus an exterior spinning bezel.