EXCLUSIVE: Bunker surge revives fuel efficiency

Geopolitical instability is sharply increasing fuel costs for shipowners, with bunker prices at some major hubs approaching US$800 per tonne of VLSFO, roughly double pre-crisis levels, says Peter Borop, chief executive of Quadrise.

The escalation comes as Red Sea disruption, the Persian Gulf crisis and uncertainty across global energy markets put further pressure on vessel operating costs.

While fuel supplies have so far remained steady, the prospect of prolonged disruption to heavy crude supplies could push prices higher. For operators, the impact is significant because fuel remains one of the largest variable costs of running a vessel, while much of the additional expense is currently being absorbed rather than passed on.

“The clearest illustration is at the vessel level,” Borop told The Motorship. “A VLCC burns around 20,000 tonnes of fuel a year, so at the pre-crisis average that’s roughly US$8m in annual fuel costs. At today’s prices, that’s closer to US$16m.”

Borop said the increase is creating a powerful new incentive for owners to invest in efficiency. He pointed to a 5% fuel saving on a VLCC, which would have been worth about US$400,000 annually at pre-crisis prices but is now worth approximately US$800,000.

“It’s operators running large volumes of conventional fuel oil who feel this hardest,” Borop said. “That fundamentally changes the payback calculation on efficiency investment.”

He said the shipping industry is now facing a situation reminiscent of the period when bunker prices exceeded US$700 a tonne in 2006/07, when efficiency became a much stronger commercial priority. The current environment, he argued, should encourage owners to focus on operational discipline and technologies capable of delivering both cost and emissions reductions.

Borop also highlighted the potential of feedstock-flexible fuel solutions using lower-value residual crude streams. Such approaches, he said, can create higher-value end products while potentially reducing fuel costs and emissions without requiring entirely new infrastructure.

However, he cautioned against expecting a single alternative fuel to solve the industry’s challenges.

“The industry risks losing time chasing a single ‘perfect fuel,’ but no such fuel exists,” Borop said. “Every option comes with trade-offs depending on vessel type, route structure and infrastructure readiness.”

According to Borop, the transition will therefore require a multi-fuel strategy, alongside greater attention to fuel optimisation and operational efficiency. He said no single fuel is capable of replacing all other marine fuels across the sector in the foreseeable future.

The scale of the current cost shock underlines the commercial stakes. The European Federation for Transport and Environment has estimated that the Persian Gulf crisis alone is adding around US$400 million a day to global shipping operational costs compared with pre-crisis levels. Global bunker sales are also projected to approach a quarter of a trillion dollars in 2026.

For shipowners, the combination of higher fuel prices and uncertain future supply is making efficiency less of a long-term aspiration and more of an immediate financial imperative.

Quadrise believes that improving fuel performance, maintaining flexibility and reducing exposure to price volatility will become increasingly central to fleet strategy as geopolitical risks continue to reshape marine energy markets.