Hi5 spreads in major Asian bunker hubs have widened more than in other regions as VLSFO prices have surged with the Iran war.

Brent crude has climbed above $100/bbl since the start of the month as the war in the Middle East has disrupted oil flows through the Strait of Hormuz, a key chokepoint for roughly a fifth of global crude supply and significant volumes of fuel oil and gasoil.

The rally in crude, fuel oil and gasoil cargo prices has lifted bunker fuel prices worldwide, but the impact has been uneven across fuel grades and regions.

VLSFO prices have more than doubled in Singapore, Fujairah and Zhoushan compared with the week preceding the attacks, while HSFO prices have risen by a smaller but still substantial rate over the same period.

Consequently, Hi5 spreads have widened significantly in the three bunkering hubs, ENGINE data shows. A wider spread increases fuel cost savings for scrubber-fitted ships running on HSFO against ships burning VLSFO.

Singapore’s Hi5 spread averaged $220/mt last week, nearly three times more than in the week before the conflict broke out.

Zhoushan’s weekly average Hi5 spread has also almost tripled, from $57/mt in the week preceding the attacks to around $160/mt last week.  

In Fujairah, where most bunker suppliers have suspended deliveries due to cross-border attacks from Iran, the weekly average Hi5 spread has widened to more than $260/mt over the same period.

In European ports, the gain has been less pronounced, with the Hi5 spreads increasing between $12-18/mt in Rotterdam and Gibraltar over the same period.  

In Houston, the spread has widened by roughly $50/mt, as HSFO prices there have also risen more strongly.

Notably, Hi5 spreads expanded more sharply in the second week as the conflict escalated and more of its full impact was felt on bunker prices. In Rotterdam and Houston, spreads did not rise at all in the first week and instead narrowed slightly.

By Nachiket Tekawade

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