LNG in MGO terms at Rotterdam was at an average discount of 6.4% to MGO.

While LNG prices have jumped significantly relative to oil since the outbreak of conflict in the Middle East over the weekend, the price spike thus far appears not to be large enough to encourage a shift back to conventional bunker fuels.

An LNG bunker market source speaking to Ship & Bunker on Tuesday suggested a 15-20% premium for LNG versus MGO would historically be considered sufficient by some of its customers with dual-fuelled vessels to consider a shift back to using oil.

The source added they would expect this attitude to come mostly from smaller shipowners, rather than the largest buyers.

LNG as a bunker fuel was available at Rotterdam at $825/mt on Monday, according to Ship & Bunker prices, or $695.50/mtMGOe in gasoil energy equivalent terms, up from $699/mt or $589/mtVLSFOe a week earlier.

By Tuesday morning the price was around $892/mt, a second LNG bunkering source said, or $752/mtMGOe in gasoil terms. This puts LNG bunkers at a discount of about 7.4% to MGO, which was available at $812/mt at the Dutch port on Monday.

In the year to February 27, LNG in MGO terms at Rotterdam was at an average discount of 6.4% to MGO.

LNG has seen the sharpest price reaction to the conflict so far, rising significantly with oil on Monday morning and since spiking much more sharply in response to QatarEnergy halting LNG production following an attack on its Ras Laffan facility. The Dutch TTF benchmark gas price stood at EUR 56.30/MWh as of 3 PM in London on Tuesday, up from EUR 30.95/MWh at Friday's close.

But MGO has also reacted strongly to the conflict. Middle Eastern refineries are significant producers of middle distillates, and the news of a shutdown of Saudi Aramco's Ras Tanura refinery - the largest plant in the region - has driven much higher prices rises for gasoil than those seen for crude oil.

The ICE March low-sulfur gasoil futures contract traded at $1,017.25/mt as of 3:57 PM in London on Tuesday, up from $752.75/mt at Friday's close.

Several shipping companies with dual-fuelled vessels switched from using LNG back to conventional fuels during 2022 as Russia's invasion of Ukraine delivered a record spike in global gas prices. But the LNG bunker price at Rotterdam peaked that year at around $4,471/mt, more than five times the current price.