Higher bunker prices to weigh on demand in Fujairah

Bunker suppliers in the world's third largest bunkering hub Fujairah in the UAE are concerned rising oil prices are weighing on marine fuels demand at the port.

A number of bunker suppliers in Fujairah said they were concerned that demand at the hub is declining as they see buyers considering taking smaller volumes of bunker fuels.

The price of very low-sulphur fuel oil (VLSFO) in Fujairah exceeded $1,000/t yesterday, according to Argus assessments. "The price is so high that many will start buying the fuel only for one journey, rather than filling their tanks affecting the liquidity," a Fujairah supplier said.

Sellers of marine fuels, especially smaller suppliers, may be forced to ease credit terms, because it could become more difficult for traders and shipowners to obtain short-term credits for large amounts to finance their purchases, according to market participants.

"Buyers will start asking for longer credit terms — 30 days or more, while suppliers themselves buy their cargoes from wholesalers on much shorter credit terms or even pay cash in advance," a Fujairah based trader said.

Fujairah traders are not worried about a possible VLSFO supply shortage at the port, in the case of sanctions on Russian oil exports. This is because only 260,000t of Russian-origin low-sulphur fuel oil arrived in Fujairah in 2021, according to Vortexa.

Most of Russian fuel oil imports consisted of high-sulphur fuel oil (HSFO), at 1.43mn t last year. But HSFO is no longer the main bunker product traded in Fujairah, and imports most likely were used for storing and/or re-exporting.

By Elshan Aliyev