LONDON: Shipping fuel prices have reached “truly unprecedented” levels, having nearly doubled from the cargo crunch driven by the Middle East war, an industry leader told AFP Wednesday.
Iranian forces’ blockade of the crucial Strait of Hormuz after the war broke out on February 28 has severely restricted the supply of ship fuels to ports in the region, said Constantinos Capetanakis, chairman of the International Bunker Industry Association (IBIA).
The average price of very low sulphur fuel oil (VLSFO) – used by many ships – across the world’s 20 largest refuelling ports was $1,017 per tonne on Wednesday, up from $544 per tonne on February 27, according to data from industry monitor Ship and Bunker.
“These are urgent situations and circumstances. You need to plan ahead as much as possible,” Capetanakis told AFP, calling for “calmness and realism” from the shipping industry.
READ MORE: Hormuz closure could triple Pakistan’s oil bill, push inflation to 15pc-17pc
Prices for marine or “bunker” fuel are at their highest since the Russian invasion of Ukraine, researchers at HSBC bank said in a report.
The surge in bunker fuel is driving a broader increase in shipping costs, as carriers introduce emergency surcharges to offset the additional expenses, big companies have said.
Prices have more than doubled since February 27 at Fujairah port in the United Arab Emirates, which was attacked over the weekend and Monday, industry journal Ship and Bunker reported.
In Singapore, the world’s largest bunkering hub, VLSFO prices are up by 106 percent.
“Ports in Europe and the Americas are more insulated for now, although we’re seeing some evidence of demand rising at hubs away from the Middle East,” Ship and Bunker financial editor Jack Jordan told AFP on Wednesday.
Bunker costs account for about 50 percent of a ship’s operating expenses, according to Capetanakis, who is also the bunker director at global shipping company Star Bulk.
The IBIA is the global trade association for the marine fuel industry.
Shipping companies and freight firms chartering vessels are reportedly adapting to the high fuel prices by ordering ships to slow down to save on fuel, or finding alternative routes and ports to bunker.
The UN International Maritime Organization began two days of talks on Wednesday to discuss efforts to ease the shipping crisis.
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