Bunker fuel

Bunker fuel is the marine fuel used to power ships and traditionally consisted of heavy fuel oil, though very low sulphur fuel oil (VLSFO) and marine gasoil have become far more important since the IMO 2020 sulphur regulations. The bunker market sits at the intersection of refining, shipping, and environmental policy. Demand is driven by global trade volumes and freight rates, so bunker prices provide clues about economic activity and vessel utilisation. Refiners pay close attention to bunker fuel pricing when deciding how to run their residue upgrading units and whether to make more high-sulphur fuel oil, low-sulphur blends, or other products. Traders look at spreads between HSFO, VLSFO, and crude to gauge refining margins and to identify blending and arbitrage opportunities between regions such as Singapore, Rotterdam, and Fujairah. Bunker buyers often hedge using fuel-oil swaps to manage price risk on long-term shipping contracts. For energy traders, the bunker market is an important part of understanding fuel-oil cracks, refinery economics, and flows between product grades.